Block Type
Knowledge Checkpoint
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- availability of substitutes. This is because if substitutes are available consumers will be more likely to switch to a cheaper similar good when price goes up eg Tesco toothpaste for Colgate (1)
- Degree of necessity. The more essential a product is the less responsive consumers will be to a change in price (1) eg bread or milk (1)
- Proportion of income. The smaller the percentage of income spent on a good/service the less responsive consumers will be to a change in price. (EXP) (1) eg matches (1)
- Frequency of purchase. The ability to postpone the purchase means that consumers will be less responsive to a change in price (1) eg Sofas (1)
- brand loyalty. If consumers have a brand preference, they may be less likely to respond to a change in price (1)
- habit forming. If a product is addictive consumers will be less likely to respond to a change in price (1) eg cigarettes (1)
- the longer the time period since the price change. This is because consumers have more time to find alternatives (1) eg changing from oil fired heating to a heat pump (1)
- how widely defined a good is. The wider the definition the less responsive consumers will be to a price change (1) eg crisps and Walkers crisps (1)