Which of the following is a major determinant of price elasticity of demand?
ECONOMICS
JAMB 2016
Which of the following is a major determinant of price elasticity of demand?
- A. The price of the commodity
- B. Availability of factors of production
- C. The prices of factors of production
- D. Income of the consumers
Correct Answer: D. Income of the consumers
Explanation
The Proportion of Consumer’s Income Spent: An important determinant of the elasticity of demand is how much it accounts for in a consumer’s budget. In other words, the proportion of a consumer’s income spent on a particular commodity also influences the elasticity of demand for it. The greater the proportion of income spent on a commodity, the greater will be generally its elasticity of demand, and vice versa.
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