Elasticity of Demand: Determinants and Examples
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What are the major determinants of price elasticity of demand? Use these determinants and your own reasoning in judging whether demand for each of the following products is elastic or inelastic, and explain your rationale for each one:
a) bottled water; b) toothpaste; c) Crest toothpaste; d) ketchup; e) diamond bracelets; f) Microsoft Windows operating system
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Solution Summary
Determinants and examples are used to examines elasticity of demand.
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There are various factors that determine the price elasticity of demand. Some of them are:
Presence of Substitutes : presence of substitutes make goods more price elastic.
Proportion of Income Spent on Goods: higher income proportion implies higher elasticity.
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