1. Determinants of the price elasticity of demand Consider the following list containing several price elasticity of demand determinants: - The availability of close substitutes I Whether a good is a luxury or necessity - How broadly the market is dened I The time horizon under consideration A good in the presence of many close substitutes is predicted to have relatively elastic V demand, since consumers can easily choose to purchase one of the close substitutes it the price of the good were to increase. The price elasticity of demand of a good depends in part on its relative necessity in comparison to other goods. Assume the following goods all have approximately the same price. Which of the goods has the least elastic demand? 0 Selfedriving ca rs O A liver for people on the transplant waiting list The price elasticity of demand for a good also depends on how the good is dened. Using the following table, organize the goods by indicatingI which you predict to have the most elastic demand, the least elastic demand, and the elasticity of demand that falls somewhere in between. Categories Most Elastic In Between Least Elastic Strawberries O O 0 Produce O O 0 Food 0 O O The price elasticity of demand of a good is also impacted by the defined time horizon. Compared to the shortrun demand for oil, the demand tor oil in the long run will tend to be V elastic