What Determines Price Elasticity of Demand

What are the major determinants of price elasticity of demand?

Elasticity of demand measures the responsiveness of demand to a change in price.

Inelastic demand means a change in price causes a smaller % change in demand. It means people are unresponsive to changes in price.

Inelastic demand will have some or all of  the following characteristics.

• Not many close substitutes
• A necessity
• A small % of income
• Bought infrequently

Readers Question: Use those determinants and your own reasoning in judging whether demand for
each of the following products is elastic or inelastic.

a. Bottled water;

There are alternative drinks, but, they are not close substitutes. Some people may not want anything else other than water, demand is fairly inelastic.
b. Toothpaste;

There are no substitutes to toothpaste (although I had an 90 year old aunt who used soap for some reason). It is also a small % of income. therefore inelastic
c. Crest toothpaste;

There are many alternative brands of toothpaste, which are quite similar. I imagine brand loyatly to crest toothpaste is fairly weak, therefore elastic

You get the idea for the others:

d. Ketchup;
e. Diamond bracelets;
f. Microsoft Windows operating system.

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