What influences price elasticity of demand?

There are two things that have an influence on price elasticity of demand; Accessibility of substitutes and the quantity of income that is spent.

If a substitute is easy to find, than the demand of a good or product is elastic. In other words, if something such as an ingredient can be replaced by another ingredient, then the good that is produced with either of those ingredients it elastic. If a substitute is difficult to find, than the demand of that product is inelastic. For instance, oil has inelastic demand because it has insufficient substitutes. It is needed to operate transportation devices such as cars, buses, boats, etc. There are three factors that contribute an influence on the aptitude to obtain a substitute from a good or product. These factors are whether the good is a luxury or a requirement, how scarcely defined it is, and the time it takes to find its substitute. Necessities are inelastic because they don’t have good substitutes, and luxuries have an elastic demand because they are not a requirement. The demand for a scarcely defined good is elastic. For instance, there are many different types of coffee drinks, such as cappuccinos, Starbucks and Indigo Coffee both makes cappuccinos. Coffee itself is inelastic, because there is no substitute that is like it. Tea, for instance is not the same as coffee it does not consist of the same ingredients. The more time that has passed since the change in price of a good occurred, the greater the elasticity becomes of demand for a good. When gas prices went up recently, the demand for gas did not change, instead people switched to more fuel efficient cars, and that is what caused the amount of fuel demanded to decrease-in which the demand became more elastic.

People are not able to purchase the same amount of goods and services as they once did when prices rise and income decreases. The greater the amount of income is spent on a good, the greater the influence of a rise in price on the amount of that good or service that people are able to meet the expense of purchasing, which results in a more elastic demand.