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Identify the main factors that determine whether demand is elastic or inelastic.

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Cambridge IGCSE EconomicsThe allocation of resources

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Identify the main factors that determine whether demand is elastic or inelastic

This point belongs to Price elasticity of demand (PED), especially Price elasticity of demand (PED) outcomes.
You need to be able to identify the main factors that determine whether demand is elastic or inelastic.
The key ideas to know are Identify and Describe.
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IdentifyDescribe

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This objective helps connect Price elasticity of demand (PED) outcomes to exam-style questions, flashcards, and revision notes for Price elasticity of demand (PED).

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Paper 2 structured question: Price elasticity of demand (PED)

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Description

Factors Affecting Demand Elasticity

Demand elasticity is influenced by several factors including the availability of substitutes, whether the good is a necessity or luxury, the proportion of income spent on the good, and the time period considered.

a
State two factors that determine whether demand is elastic or inelastic.
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Aim for approximately 2 distinct marking points.
[2]

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Related learning objectives

Understand the concept of price elasticity of demand (PED).
Price elasticity of demand (PED) outcomes
Calculate price elasticity of demand using the appropriate formula and explain what the results indicate. Create and analyze demand curve diagrams to illustrate varying levels of PED.
Price elasticity of demand (PED) outcomes
Examine the connection between price elasticity of demand and total revenue/spending on a product, represented through both diagrams and calculations.
Price elasticity of demand (PED) outcomes
Discuss the importance of price elasticity of demand for decision-making processes among consumers, producers, and government entities.
Price elasticity of demand (PED) outcomes

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