Air travel and train travel are weak substitutes for inter-continental flights but closer substitutes for journeys of around 200-400km e.g. Below are the important factors that directly or indirectly influence the degree of demand to any small change in price: 1. between major cities in a large country. Proportion of income spent 6.

Nature of goods 2.
The proportion of labour costs in total costs: If labour costs form a large proportion of total costs, a change in wages would have a significant impact on costs and hence demand would be elastic. Nature of the commodity.

Income level. The following points highlight the seven main factors affecting the price elasticity of demand. Availability of substitutes 3.

The number of close substitutes – the more close substitutes there are in the market, the more elastic is demand because consumers find it easy to switch.E.g. The factors are: 1.Nature of the Good 2.Availability of Substitute Goods 3.Number and Variety of Uses of the Product 4.Proportion of Income Spent on the Good 5.Role of Habits 6.Possibility of Deferment of Consumption 7.Price of the Good. In some cases, the sign is unambiguous, while in others, it is ambiguous. Alternative use 4. Cross elasticity of demand measures the responsiveness of change in the price of one good to the quality of the other good. First, it is important to understand the difference between own price elasticity and cross-price elasticity.Own price elasticity concerns about the responsiveness of the the quantity demanded of good X to a change in its own price; while cross-price elasticity concerns with the responsiveness of demand of good X to a change in price of good Y.So the size of cross-price elasticity, i.e. The factors are: 1. 9 most essential factors that determines the elasticity of demand are : 1. Possibility of postponing consumption 5. Factors affecting price elasticity of demand. Price-level 7.

Nature of the Good 2. The sign of the cross-price elasticity of demand depends on the relative extent of operation of the various factors that influence the cross-price elasticity of demand noted above. Durability of commodities and 9.

Elasticity has been argued has primarily depending on if the actual commodity to be demanded is a basic necessity, a comfort or a luxury. 2.2: Factors that determine elasticity of demand.

Availability of Substitute Goods 3.
Factors Affecting the Price Elasticity of Demand | Economics The following points highlight the seven main factors affecting the price elasticity of demand. Force of habit 8. Some of the main determinants of elasticity of demand for labour are as follows: i.

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