1. Determinants of the price elasticity of demand Consider some determinants of the price elasticity of demand: . The availability of close substitutes . Whether the good is a necessity or a luxury . How broadly you define the market . The time horizon being considered A good with many close substitutes is likely to have relatively _elastic * demand, since consumers can easily choose to purchase one of the close substitutes if the price of the good rises. A good's price elasticity of demand depends in part on how necessary it is relative to other goods. If the following goods are priced approximately the same, which one has the most elastic demand? O Diamond necklace O Amputation procedures for diabetes sufferers The price elasticity of demand for a good also depends on how you define the good. Organize the goods found in the following table by indicating which is likely to have the most elastic demand, which is likely to have the least elastic demand, and which will have demand that falls in between.Module Three Quiz X substitutes IT the price or the good rises. A good's price elasticity of demand depends in part on how necessary it is relative to other goods. If the following goods are priced approximately the same, which one has the most elastic demand? O Diamond necklace O Amputation procedures for diabetes sufferers The price elasticity of demand for a good also depends on how you define the good. Organize the goods found in the following table by indicating which is likely to have the most elastic demand, which is likely to have the least elastic demand, and which will have demand that falls in between. Categories Most Elastic In Between Least Elastic Clothing O O O Boot-cut jeans O O O Pants O O O The price elasticity of demand is also affected by the given time horizon. Other things being equal, the demand for natural gas will tend to be elastic in the short run than in the long run. Grade It Now Save & Continue Continue without saving17. Another supply and demand puzzle The market price of cheeseburgers in a college town increased recently, and the students in an economics class are debating the cause of the price increase. Some students suggest that the price increased because several burger joints in the area have recently gone out of business. Other students attribute the increase in the price of cheeseburgers to a recent increase in college student enrollment. The first group of students thinks the increase in the price of cheeseburgers is due to the fact that several burger joints in the area have recently gone out of business. On the following graph, adjust the supply and demand curves to illustrate the first group's explanation for the increase in the price of cheeseburgers. Note: Select and drag one or both of the curves to the desired position. Curves will snap into position, so if you try to move a curve and it snaps back to its original position, just drag it a little farther. O Supply Demand Supply E (Dollars per cheeseburger)Module Three Quiz X Domanu Supply PRICE (Dollars per cheeseburger) Demand QUANTITY (Cheeseburgers) Suppose that both of the events you have just analyzed are partly responsible for the increase in the price of cheeseburgers. Based on your analysis of the explanations offered by the two groups of students, how would you figure out which of the possible causes was the dominant cause of the increase in the price of cheeseburgers? O Whichever change occurred first must have been the primary cause of the change in the price of cheeseburgers. If the equilibrium quantity of cheeseburgers increases, then the supply shift in the market for cheeseburgers must have been larger than the demand shift. If the price increase was large, then the supply shift in the market for cheeseburgers must have been larger than the demand shift. O If the equilibrium quantity of cheeseburgers increases, then the demand shift in the market for cheeseburgers must have been larger than the supply shift