Question

USING the determinants of price elasticity of demand, discuss whether you think the price elasticity of demand for cherries are to be inelastic or elastic?

Answer 1

The determinants of price elasticity of demand are:-

1) availability of substite good.

2) income

3) the price of the commodity.

There is no such any substitute for fresh cherries but preserved cherries are always an option. Hence, if the price of fresh cherry would deviate very much, people would rather start consuming preserved cherries. Hence, it would be elastic.

2) if income of the consumers would vary the quantity of consumption would vary too, hence, it is elastic.

3) if the price of the commodity would vary a lot, people would vary their consumption too and consuming cherries is not a necessity. Hence, it would vary and it is elastic