Determinants of Price Elasticity of Demand:

The price elasticity of demand varies widely across difference goods. Some goods have more elastic demand while others have less elastic. The major factors that determine price elasticity of demand are:

Number of close substitute goods

The more substitutes a good has nad the more close the substitutes are, the more elastic the demadn for the good. For example the beverage, bornvita, has a number of close substitutes such as milo, chocomilo, ovaltine etc. Therefore, the demand for bornvita is likely space to be more elastic because the slightest increase in the price of bornvita, comsumers of the product will switch to the comsumption of one of the substutes.

On the other hand, if the good does not have any close substitute, the demand tends to be less elastic or inelastic. For example, there is hardly a substitute to food as a whole hence the demand for food as a whole is inelastic.