Using milk as and example, what factors affect value of price elasticity of demand for a good or service?
There are three major determinants of price elasticity of demand. They are:
The availability of substitutes. If there are other products that can be used instead of (in this case) milk, the demand for milk will be relatively elastic. If the price goes up, people will switch to the other products.
Share of budget spent on the product. The more expensive an item is (relative to how much money a given person has available), the more elastic its demand will be. If the price of the milk you buy is a large item in your budget, you will be more sensitive to price increases.
Time frame. The longer the time frame in question, the more elastic the demand. If the price of milk goes up, you will probably buy the same amount this week. But over time you might adapt and find ways to buy less milk.