2.6 Elasticity

Question 1

What are the factors which determine the value of PED?

Answer 1

Availability and accessibility of substitutes
The ease of switching to alternatives
The extent to which the product is a necessity
Brand loyalty
Proportion of consumer expenditure
The extent to which the product is part of habitual consumption
Time period

Question 2

What are the factors which determine the value of YED?

Answer 2

If the product is a necessity/superior product (luxury)
Brand loyalty
Inferior goods have negative YED

Question 3

What are the factors which determine the value of PES?

Answer 3

Time period
Availability of storage/stored stock
Access to factors used in production
Spare capacity
Mobility of factors of production