# What makes demand more elastic?

## What makes demand more elastic?

Many factors determine the demand elasticity for a product, including price levels, the type of product or service, income levels, and the availability of any potential substitutes. High-priced products often are highly elastic because, if prices fall, consumers are likely to buy at a lower price.

### Which demand curve is most elastic?

Many goods that are necessities or have very few substitutes behave this way. A demand curve with an elasticity near -1 is said to be “uniformly elastic.” A highly elastic demand curve is very flat (η between -2 and -5). Luxury goods, or goods with lots of substitutes behave like this.

#### What makes a demand curve flatter?

A product with high price elasticity of demand will see demand fall sharply when prices rise. For the product with high elasticity of demand, the downward-sloping demand curve appears flatter, and for every change in price, there is a large change to the quantity demanded.

Which variables make the demand curve flatter and more elastic?

A flatter curve is relatively more elastic than a steeper curve. Availability of substitutes, a goods necessity, and a consumers income all affect the relative elasticity of demand. The availability of resources, technological innovation, and the barriers to entry all affect the relative elasticity of supply.

How do you know if a curve is elastic?

If a curve is more elastic, then small changes in price will cause large changes in quantity consumed. If a curve is less elastic, then it will take large changes in price to effect a change in quantity consumed. Graphically, elasticity can be represented by the appearance of the supply or demand curve.

## What is the slope of an elastic demand curve?

Therefore, the slope of the demand curve represents the change in price divided by change in quantity, and it can be thought of as answering the question “by how much does an item’s price need to change for customers to demand one more unit of it?”

### What is the slope of the demand curve?

Since slope is defined as the change in the variable on the y-axis divided by the change in the variable on the x-axis, the slope of the demand curve equals the change in price divided by the change in quantity. To calculate the slope of a demand curve, take two points on the curve.

#### Is 0.8 elastic or inelastic demand?

More precisely, it gives the percentage change in quantity demanded in response to a one percent change in price (ceteris paribus, i.e. holding constant all the other determinants of demand, such as income). If price elasticity of demand for petrol is 0.8, the demand is inelastic.

What is an example of elastic demand?

An example of products with an elastic demand is consumer durables. These are items that are purchased infrequently, like a washing machine or an automobile, and can be postponed if price rises. For example, automobile rebates have been very successful in increasing automobile sales by reducing price.