4. DETERMINANTS OF PRICE ELASTICITY OF DEMAND (1) (3) The fast rule is to see how important the good is to the buyer the higher the importance, the more [ elastic / inelastic] it is (e.g. MTR service); alternatively, the lower the importance, the more [ elastic/ inelastic] it is (e.g. hamburgers). - Note: The definition of \"importance\" is very personal, which means the price elasticity of a good is merely subject to the viewpoint of the decision maker. For example, the M TR service may be considered important (inelastic) to students, but seen less important (elastic) to other people. 0 Note: Points (2) and (3) below give you some idea on how \"importance\" may be judged by individuals. Availability of substitutes A good tends to become less important if it has many close substitutes. Hence, the more the substitutes available, the more [ elastic/ inelastic] would be the demand for a good. For example, Giordano's clothes have many close substitutes. lf Giordano raises the price for its clothes, its Qd tends to fall by a relatively [ large / small] amount; that is, [ elastic/ inelastic] demand. Perception of necessities versus luxuries: Necessities (such as medicines, bus service and foodstuff) tend to have [ elastic / inelastic] demand (as people can't avoid or reduce the Qd by much for a price increase). Luxuries (such as diamonds, sailboats and a tour to South Pole) tend to have more [ elastic / inelastic] demand. 0 Note: The distinction between necessity and luxury is again very personal and therefore never stable. For example, while diamond may be a luxury to you, but it could be regarded as important necessity to rich people