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4.1. Own-Price Elasticity of Demand umers are much more likely to give up their Friday night restaurant meal than they are to cut back significantly on staples in their pantry. The more a good is seen as being necessary, the less elastic its demand is likely to be.
<span>In summary, own-price elasticity of demand is likely to be greater (i.e., more sensitive) for items that have many close substitutes, occupy a large portion of the total budget, are seen to be optional instead of necessary, and have longer adjustment times. Obviously, not all of these characteristics operate in the same direction for all goods, so elasticity is likely to be a complex result of these and other characteristics. In the end, the actual elasticity of demand for a particular good turns out to be an empirical fact that can be learned only from careful observation and often, sophisticated statistical analysis.
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