Homework (Ch 05) . 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 in the presence of many close substitutes is predicted to have relatively demand, since consumers can easily choose to purchase one of the close substitutes 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 most elastic demand? Access to medicine for individuals with chronic illnesses Designer clothing 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 Shoes O O O Adidas copa mundials O O O Soccer cleats O O O The price elasticity of demand of a good is also impacted by the defined time horizon. elastic in the short run than in the long run. All else equal, the demand for natural gas will tend to be Grade It Now Save & Continue Continue without saving