One of the determinants of the elasticity of demand is whether a good is a luxury or a necessity.

Question

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Luxury goods tend to have higher elasticities of demand because they are not essential for daily living and consumers have more flexibility in adjusting their consumption in response to changes in price. Necessities, on the other hand, tend to have lower elasticities of demand because consumers are less able to reduce their consumption even in the face of price increases.

One of the Determinants of the Elasticity of Demand Is