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17 March, 20:15

How does the existence of substitutes affect the price elasticity of demand?

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  1. 17 March, 20:43
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    The price elasticity of demand (PED) is a calculation of how much the measure demanded changes with a change in price. When there is accessibility of substitute goods, the more probable substitutes there are for a given good or service, the greater the elasticity. When some close substitutes are accessible or available, consumers can easily change from one good to another even if there is only a small change in price. On the other hand, if no substitutes are available, demand for a good is more likely to be inelastic.
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