Which of the following is a factor used to determine the price elasticity of demand?

• A. Time since last price change
• B. Brand loyalty
• C. Availability of substitutes
• D. Climate

Answer: (B)

Price elasticity of demand measures how much the quantity demanded changes when price changes. A key factor shaping that responsiveness is brand loyalty. When customers feel loyal to a brand, they’re less likely to switch to alternatives if the price rises, so demand for that brand becomes more inelastic. In other words, loyalty dampens the effect of price changes on quantity sold because the consumer values the brand and sticks with it despite price moves.

Climate isn’t relevant to how responsive buyers are to price. Time since the last price change can influence how quickly buyers adjust, but it doesn’t determine the inherent degree of responsiveness. Availability of substitutes does affect elasticity in general, since more substitutes make switching easier, but loyalty specifically describes the commitment to a single brand and its impact on price responsiveness.