Learning Contents:   ·         Factors affecting Price Elasticity of Demand / Determinants of Price Elasticity of Demand Factors affecting Price Elasticity of Demand There are several factors that explain the reasons whether the demand is elastic or not. The price elasticity of demand depends on various factors such as the nature of goods, availability of substitutes, consumer habits, consumer’s income, and so on. The brief description of such factors that affect the price elasticity of demand is as follows: 1.       Nature of Goods Necessary goods such as fuel, electricity, water, medicines, etc. tend to have inelastic demand. Their consumption cannot be cut off even if their price increases as they are the essentials of our life. On the other hand, Luxury goods such as food, entertainment, furniture, etc. tend to have relatively elastic demand because their consumption can easily be cut off when time goes tough. Hence, Necessary goods have less elastic demand as compare