How is the magnitude of price elasticity for an individual good determined 1 By the degree to which ...........

Indian Economic System Financial System

How is the magnitude of price elasticity for an individual good determined?

1. By the degree to which the good is a necessity or luxury

2. By the extent to which substitutes are available

3. By the rate of income growth in the economy

4. By the relative importance of the good in the consumer's budget

Select the correct answer using the code given below.

This questions was previously asked in

CAPF 2021 Paper-1

1, 2 and 3

1 and 4 only

1, 2 and 4

3 and 4

1, 2 and 4

Luxuries and necessities:-Luxuries are things we can do away with; hence, they tend to have elastic demand.
The number of close substitutes goods:-The more substitutes a good has and the more close the substitutes are, the more elastic the demand for the good is.
The number of the possible uses:-A commodity has a high price elasticity of demand (or elastic demand) if it can be put into so many uses.