Factors affecting PED (price elasticity of demand)

• Few substitutes — if consumers cannot easily switch to another product, demand is more price inelastic (PED closer to 0). A price rise causes only a small fall in quantity demanded.
• Low competition — with few rival firms or brands, consumers have less choice, so demand tends to be more inelastic.
• Habitual / addictive goods — cigarettes, coffee or daily routines make consumers less responsive to price changes → lower PED (more inelastic).
• Price sensitivity — if buyers are highly aware of and react to price changes, demand is more elastic (higher |PED|). Luxury or easily postponed purchases are often more price sensitive.
• Proportion of income — goods that take up a large share of a consumer's budget (e.g. rent, cars) tend to have more elastic demand, because a price change has a bigger impact on real spending power.

Factors affecting PES (price elasticity of supply)

• Length of production — the longer it takes to make a good, the harder it is to increase output quickly → supply is usually more inelastic in the short run.
• Ease of storage — if output can be stored (e.g. grain in silos), producers can release stock when price rises → supply is more elastic.
• Time period — over a longer time, firms can hire workers, buy capital and expand capacity → supply becomes more elastic than in the short run.
• Complexity of production — goods needing specialist skills, long supply chains or rare inputs are harder to scale up → more inelastic supply.
• Spare capacity — if firms have unused machines or idle workers, they can raise output quickly when price rises → more elastic supply.
• Scarcity of resources — when key inputs (land, raw materials, skilled labour) are limited, firms struggle to expand output → supply is more inelastic.