Which of the following is a factor affecting price elasticity of demand?

• A. Time since last price change
• B. Production cost
• C. Supplier distance
• D. Advertising expenditure

Answer: (A)

Price elasticity of demand measures how much quantity demanded changes when price changes. A key factor shaping that responsiveness is the amount of time buyers have to react after a price move. In the short run, consumers can’t easily change their habits or find substitutes, so the drop in quantity demanded is smaller and elasticity is low. Over a longer period, people can switch to alternatives, adjust their budgets, and rethink consumption, making demand more responsive to price changes. This time available to adjust—essentially how long it’s been since the price changed—directly affects how elastic demand is.

The reason this option fits best is that it directly captures the role of time in allowing adjustments to occur. Production costs influence supply decisions, not how sensitive demand is to price. Advertising can shift demand levels but doesn’t inherently change the responsiveness to price. Supplier distance isn’t a standard determinant of price elasticity of demand.