Question : Which of the following is NOT a determinant of demand elasticity?
Option 1: Nature of the good
Option 2: Time period under consideration
Option 3: Consumer preferences
Option 4: Production costs
Correct Answer: Production costs
Solution : The correct answer is (d) Production costs
Production costs are not a determinant of demand elasticity. Demand elasticity refers to the responsiveness of quantity demanded to changes in price, income, or other relevant factors. The determinants of demand elasticity include factors such as the nature of the good (availability of substitutes, necessity vs. luxury), consumer preferences, and the time period under consideration.
Production costs, on the other hand, are factors that affect the supply of goods rather than the demand. They include expenses related to materials, labor, and overhead costs involved in producing goods or services. While production costs can influence supply and ultimately impact prices, they are not directly related to demand elasticity.
