Price elasticity of demand is determined by a number of factors, such as the necessity of the product or service, the cash outlay of the purchase relative to a person's disposable income, and
A)the stage of the product or service in its product life cycle.
B)the degree of carrying costs for the manufacturer or distributor.
C)the availability of substitutes.
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 availability of substitutes is a major factor in determining the price elasticity of demand. If there are many substitutes available for a particular product or service, consumers may be more likely to switch to a cheaper option if the price of the original product/service increases. This means that the demand for the original product/service is likely to be more elastic (responsive to changes in price). On the other hand, if there are few or no substitutes available, consumers may be willing to pay more for the product/service, making the demand less elastic.

Price Elasticity of Demand Is Determined by a Number of Factors