These are the factors which decide the demand elasticity of the consumer. The elasticity of demand may be more elastic or less elastic. The six factors which determine the elasticity of demand are given below:
- Nature of commodity: There are three types of commodities. The necessities are the things which are essential for the consumer like salt, sugar etc. The demand of these kinds of products does not change much with the change in the price. So the demand of these kinds of products is inelastic. But in case of luxuries products the demand varies with the change in the price. if the price is high some people will stop buying it while if the price falls some people will start buying it. So the demand of these kinds of products is more than elastic. In case of comforts which are required for the comfort of the consumer like air conditioners, heater etc. their demand is elastic.
- Income level: There are three types of classes. Rich people demand is inelastic it does not move with the change in the price as they have everything they don’t want anything, poor people demand is also inelastic as they don’t have the money to buy the product. The demand is only elastic in case of middle class people as when their one want is satisfied the new want crops up.
- Level of price: if the price level of the commodity is high the demand will be more elastic, if the price level of the commodity is low then demand will be less elastic.
- Postponement of consumption: if the demand of the consumer can be postponed, then demand will be more elastic if the demand cannot be postponed then demand will be less elastic.
- Number of uses: There may be many uses of the product or less uses of the product. The product like milk has many uses. It can be used as milk, curd, paneer, etc. but in case the prices of such products increase then the demand will be more elastic. It means the consumer will use only the product which they need. But in case if the product is used only as it is then the demand of the consumer will be less elastic as the consumer will have no choice in that case.
- Availability of substitutes: if the product has number of substitutes available in that case the demand of the consumer will be more elastic otherwise if no substitutes available demand will be less elastic.
The above are the 6 factors affecting the elasticity of demand.