Continuing our example, we note there are also more substitutes for new cars than there are for toothpaste. One good substitute for a new car is a used car; another is, for many people, keeping the car they already own. While there are substitutes for toothpaste, they aren't as close.

   Thus, we've already uncovered two product characteristics that may help explain elasticity... availability of close substitutes for the good, and the price of the good relative to one's income.

   Therefore, goods with many close substitutes and very expensive goods tend to exhibit elastic demand. Likewise, goods with few substitutes and goods with prices that are small relative to income tend to have inelastic demand.

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