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Which of the following is a major determinant of price el...

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 is D

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.