Which factors affect elasticity?

Elasticity measures how responsive the quantity demanded of a good is to changes in factors like price, income, or the price of related goods. The factors that affect elasticity include necessity, the availability of substitutes, the proportion of income allocated to a good, and the time period under consideration.

When a good is a necessity, demand tends to be inelastic because consumers will buy it regardless of price changes. Conversely, goods that have close substitutes tend to have more elastic demand, as consumers can easily switch to alternatives if prices rise. Additionally, the proportion of income spent on a good affects its elasticity; goods that consume a larger share of income will generally have more elastic demand because price increases have a more significant impact on consumers' budgets. Lastly, elasticity can vary over time; demand may be more elastic in the long run as consumers find alternatives or adjust their habits compared to the short run.

The other options primarily refer to factors that do not directly influence the concept of elasticity in the same way. For instance, while the availability of raw materials can affect supply and production costs, it does not directly dictate how quantity demanded responds to price changes.