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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA BT – FIA FBT › Microeconomics and macroeconomics
The factors affecting price elasticity and do they affect it?
The main factors are:
1 Are the goods luxuries or necessities? Necessities are usually price inelastic.
2 If substitutes are available this will tend to make the goods price elastic.
3 Strong brands usually tend to be price inelastic.
4 Proporrion of income spent on the goods. If high, then the goods tend to be more price elastic.