Question : Which of the following factors does NOT affect the price elasticity of demand?
Option 1: Availability of substitutes
Option 2: Time period
Option 3: Proportion of income spent on the good
Option 4: Government regulations
Correct Answer: Government regulations
Solution : The correct answer is (d) Government regulations
Government regulations do not directly affect the price elasticity of demand. Price elasticity of demand is determined by factors such as the availability of substitutes, the time period under consideration, and the proportion of income spent on the good. These factors influence the responsiveness of consumers to changes in price. Government regulations can indirectly impact demand through various mechanisms, such as imposing taxes or subsidies, but they do not directly alter the price elasticity of demand.
