State with reasons whether you agree or disagree with the statement : Elasticity of demand depends upon several factors.

Answer: I agree with the statement.

The degree of elasticity of demand of a commodity is determined by many factors:

1. Nature of the commodity: Demand for necessities is inelastic; demand for luxuries is elastic.
2. Availability of substitutes: Goods with close substitutes have elastic demand; goods without substitutes have inelastic demand.
3. Number of uses: Goods with many uses (electricity) have elastic demand.
4. Habits: Demand for goods of habit (tea, cigarettes) is inelastic.
5. Postponement of use: If consumption can be postponed, demand is elastic.
6. Income of the consumer: Demand of rich people is relatively inelastic.
7. Proportion of income spent: Goods on which a small part of income is spent (salt, matchbox) have inelastic demand.
8. Durability and time period: Demand is more elastic in the long period.