Price elasticity of demand is determined by a number of factors,such as the availability of substitutes,the necessity of the product or service,and
A)the cash outlay of purchase relative to a person's disposable income.
B)the stage of the product or service in its product life cycle.
C)the degree of carrying costs for the manufacturer or distributor.
D)the financial resources of the organization itself.
E)the ability of the organization to meet sudden increases in demand.

Question

Quizplus · Accepted Answer

The cash outlay of purchase relative to a person's disposable income is a key factor in determining price elasticity of demand. If a product or service is expensive and takes up a large portion of a person's disposable income, then demand is likely to be more sensitive to changes in price. On the other hand, if a product or service is relatively cheap and only represents a small portion of a person's disposable income, then demand is likely to be less sensitive to changes in price.

Price Elasticity of Demand Is Determined by a Number of Factors,such