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Mar 27, 2013 · 1. The price elasticity of demand coefficient measures: A. buyer responsiveness to price changes. B. the extent to which a demand curve shifts as incomes change. C. the slope of the demand curve. D. h … read more

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When the price of cigarettes increases by 20 sen, price elasticity of demand can be applied to it. Price of elasticity of demand happens when the percentage change in the quantity demanded is less than percentage change in prices. There are a few determinants of price elasticity of demand; first of all I will write about the closeness of ...

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B. The Price Elasticity of Demand and Its Determinants 1. Definition of price elasticity of demand: a measure of how much the quantity demanded of a good responds to a change in the price of that good, computed as the percentage change in quantity demanded divided by the percentage change in price. 2. Determinants of Price Elasticity of Demand a.

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The factors that determine the price elasticity of demand for a good are: substitute goods - if a good has many substitutes, a change in its price will have a major impact on its demand. Consumers will turn to the substitute goods instead of buying a good that suddenly has become more expensive. Oct 02, 2013 · The concept of price elasticity of demand is useful to a government if the government is setting prices for goods or services. A good example of this is the minimum wage.

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4. Determinants of the price elasticity of demand Consider some determinants of the price elasticity of demand: • The availability of close substitutes • The proportion of a consumer's budget spent on the good • The time horizon being considered demand, because consumers cannot easily switch to a substitute good if A good without any close substitutes is likely to have relatively the ...

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