1. Determinants of the price elasticity of demand

Consider the following list containing several price elasticity of demand determinants:

	The availability of close substitutes
	Whether a good is a luxury or necessity
	How broadly the market is defined
	The time horizon under consideration

A good with no close substitutes is predicted to have relatively (elastic / inelastic ) demand, since consumers cannot easily switch to a substitute good if 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 leastelastic demand?

(Insulin for people with diabetes/Gold jewelry)

The price elasticity of demand for a good also depends on how the good is defined.

Using the following table, organize the goods by indicating 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
Alcohol
Raspberry white claw
Hard seltzer

The price elasticity of demand of a good is also impacted by the defined time horizon.

Compared to the short-run demand for oil, the demand for oil in the long run will tend to be (less/more/no more/no less) elastic.