Elasticity Influences Flashcards
1
Q
What factors influence the PED
A
- Substitutes (more substitutes = higher PED); consumers can switch easily
- Type of good
- % income spent
- time
2
Q
PED for essential items
A
Inelastic
3
Q
PED for non-essentials
A
Elastic
4
Q
PED for habit forming goods
A
Inelastic
5
Q
PED for purchases that cannot be postponed
A
Inelastic
6
Q
PED for products with several different uses
A
Inelastic
7
Q
PED for goods with more than one use
A
Inelastic
8
Q
Demand for products that need a large proportion of the consumers income
A
Is more PED than demand for products that only need a small proportion of income
9
Q
Time
A
In the long run demand becomes more price elastic as it becomes easier to change alternatives because consumers have the time to shop around
