Factors Affecting the Elasticity of Demand

The elasticity of demand measures the responsiveness of the quantity demanded of a good to a change in its price, price of other goods, and changes in the consumer’s income.

After going through this lesson, you will be able to understand the main factors affecting the Elasticity of Demand.

Alfred Marshall was the first economist to develop the concept of price elasticity of demand as the ratio of a relative change in quantity demanded to a relative change in price.

Factors Affecting the Elasticity of Demand

Factors Affecting the Elasticity of Demand


The main factors affecting the Elasticity of Demand are as follows:

FactorsNature of the FactorElasticity of Demand
Number of commodities1. Necessary items
2. Luxury items
1. Relatively inelastic
2. Relatively elastic
Number of substitutes1. Many
2. Few
1. Relatively elastic
2. Relatively inelastic
Variety of uses1. Many
2. Few
1. Relatively elastic
2. Relatively inelastic
Income of the purchaser1. High-income group
2. Low-income group
1. Relatively inelastic
2. Relatively elastic
The habit of the purchaser in consuming any commodity1. Habituated
2. Not habituated
1. Relatively inelastic
2. Relatively elastic
The durability of the goods1. Durable
2. Non-durable
1. Relatively inelastic
2. Relatively elastic
Importance of the commodity in consumer’s budget1. Insignificant share
2. Significant share
1. Relatively inelastic
2. Relatively elastic
Possibility of postponing consumption1. Possible
2. Impossible
1. Relatively elastic
2. Relatively inelastic
Price level1. High
2. Low
1. Relatively elastic
2. Relatively inelastic
Time1. Short-run
2. Long-run
1. Relatively inelastic
2. Relatively elastic

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