What is the most important determinant of the price elasticity of demand for a good?
A)The definition of the market for a good
B)The availability of substitutes for the good
C)The share of the good in the consumer's budget
D)Whether the good is a necessity or a luxury

Question

Quizplus · Accepted Answer

The availability of substitutes for the good is the most important determinant of the price elasticity of demand. If there are many substitute goods available, consumers have more options and are more likely to switch to a different good if the price of their preferred good goes up, making demand more elastic. On the other hand, if there are no close substitutes, consumers are more likely to continue buying the good even if the price increases, making demand less elastic.

What Is the Most Important Determinant of the Price Elasticity