The most important determinant of price elasticity of demand is:
A)the availability of substitutes.
B)the higher the price of the good.
C)the more of the budget is spent on the good.
D)the longer the time the consumer has to adjust to price changes.

Question

Quizplus · Accepted Answer

The availability of substitutes is the most important determinant of price elasticity of demand because if there are many substitutes available, consumers can easily switch to other similar products when the price of one product increases, making the demand more elastic. On the other hand, if there are no close substitutes, consumers have less choice and are less likely to change their consumption habits, making the demand more inelastic. The other options may also affect the price elasticity of demand, but their influence is not as significant as the availability of substitutes.

The Most Important Determinant of Price Elasticity of Demand Is