Answer:
Four factors affecting elasticity of demand are as follows : (i) Nature of the Commodity Nature of the commodity is an important determinant of the Price Elasticity of Demand. Necessities like food items and prestige goods have an inelastic demand, while luxuries and comforts have comparatively elastic demand. (ii) Availability of Substitutes The demand for commodities having close substitutes is very elastic because if there is an increase in the price of the commodity, then people will start using substitute commodities. (iii) Postponement of Consumption The demand for commodities is elastic, whose consumption can be postponed for some time such as the demand of television, otherwise it is inelastic for commodities whose demand cannot be postponed as in the case of medicines. (iv) Different Uses of the Commodity A commodity which has several uses will have an elastic demand. On the other hand, a commodity having only one use will have inelastic demand, e.g. milk, steel, etc have elastic demand because they can be put to several uses.
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