What factors determine the elasticity of resource demand?

Several factors are influencing the elasticity of resource demand. A simple change in a products price has no direct influence on changes in demand. Nonetheless, factors are shaping the elasticity of a commodity.

The nature of a commodity influences the elasticity of a resource. The reason behind this is because the resource may be a luxury, comfort, or even a necessity to an individual. The nature of a resource dictates is elasticity of inelasticity.

The level of income influences demand elasticity of a resource. There is less elasticity where there is a large proportion of high-income earners. Rich individuals are in no way influenced by changes in prices.

Presence of substitutes affects the elasticity of resources? demand. There is more elasticity to a resource with numerous substitutes. A small rise in a resources? price drives customers to opt for purchasing substitutes.

Other factors determining the elasticity of the demand of a resource are; prices, number of those using a resource, and total expenditure.

Elasticity of Resource Demand:

Demand and supply dictate the pace of the economy. The two factors affect one another. In economics, demand of a product determines the market prices.