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Factors that influence the PED for a good or service - Coggle Diagram
Factors that influence the PED for a good or service
Proportion of income
The larger the proportion of income a product is, the more elastic
E.g. Bottled water accounts for a small % of our income - elastic
Loyalty
Strong customer loyalty will be more inelastic (branding, quality, etc.)
E.g. Samsung/Apple - inelastic
Addictiveness
Good with addictive or habitual tendencies - inelastic
E.g. Cigarettes - inelastic
Necessities
More inelastic, luxuries more elastic
E.g. Milk, bread, butter - inelastic
Holidays (luxury) - elastic
Time
The longer the time since the price changed the more elastic
E.g. Mobile phone contracts - elastic
Substitutes
The closer the substitute the more elastic, branding has the effect of differentiating a good more - inelastic
Supermarket own brand milk - elastic