The elasticity of the demand curve can be affected by several different factors. You can begin to understand these by thinking why it is that you would respond differently to change in the price of Cherry Ripe bars than your family would to a change in the price of bread. Consider the following things:
The availability of substitutes: If a product can be replaced by another that will satisfy the same want, then demand is more likely to be elastic (we can replace a Cherry Ripe with a different chocolate bar if the price goes up).
The percentage of your income: When a product represents a “major purchase”, it is more likely to have an elastic demand curve. For example, the price of safety pins represents a very small percentage of the average income, and so if we need them we will buy them without worrying too much about the price. On the other hand, when buying a new sofa we are more likely to look closely at the price, as it represents a much higher percentage of our income.
Decision time: If you have to make a decision quickly, demand will be relatively inelastic. On the other hand, if you have more time in which to make your decision you are more likely to find appropriate substitutes.
Is the item a “need” or a “want”: If the item is a need (such as bread) then the demand curve is far more likely to be inelastic. Wants, on the other hand, tend to have more elastic demand curves. Economists refer to this as the "degree of necessity".
