Price elasticity of demand measures consumers' responsiveness to changes in the price of a good. There are a number of variables that affect consumers' decisions, among them the following:

• The availability of substitutes
• The specific nature of the good
• The percent of the income spent on the good
• The time consumers have to buy the good

ANSWER THE QUESTIONS:

1. Choose a product that you have purchased in the past 1-3 months from a clothing or shoe store.
2. Describe how each of the 4 factors listed above contributed to the elasticity of the good.
3. Is the demand for the product considered elastic, inelastic, or unitary elastic?
4. What effect does the current supply and current demand have on this product?