The price elasticity of demand depends upon the following factors:
(i) Nature of the Commodity: The impact of change in price of a commodity on its demand depends upon the type of need fulfilled by the commodity. Change in the price of commodities like flour, salt, etc. will have a very small impact on quantity demanded because these are necessities. Thus, their demand is inelastic. On the other hand, there will'be a greater impact of change in price on demand for luxuries. That is,their demand is elastic.
(ii) Availability of Substitutes:The demand for a commodity is relatively elastic if there are close substitutes available for it. Commodities like tea, fountain pen, ghee, etc. have relatively elastic demand as they have substitutes like coffee, ball-point pen, oil, etc. respectively. For instance, people will substitute ball-point pen for fountain pen if the price for ball-point pen falls. The demand for a commodity is relatively inelastic if there are no substitutes available for it. Commodities like salt, water, etc. have relatively inelastic demand. The demand for salt will not get affected due to a change in its price.
(iii) Commodities with Several Uses:Those commodities which can be used for various purposes have relatively elastic demand. For example, if electricity becomes costly then it will no longer be used for heating, making food and ironing. It will be used only for lighting. A change in price will affect the total demand a lot. On the contrary, the commodities which have minimum or single use have inelastic demand.
(iv) Postponement of Consumption:The commodities whose consumption can be postponed to future have elastic demand. For example, when the current price of computers increases,the people will postpone the demand for the same.As a result, its current demand will decrease a lot.
(v) Habits of Consumer: The commodities to which a consumer is habitual have inelastic demand. For instance, if price of cigarettes increases then there will be no specific effect on its demand becaus it is a commodity of habit.
(vi) Price Ranges:Very high priced and very low priced commodities have inelastic demand. If price of a truck increases from Rs.6 lakh to Rs.6 lakh 10 thousand then there will be no specific effect on its demand. A person who can arrange Rs.6 lakh for buying a truck, can also collect arrange Rs.1.0 thousand. Similarly.an increase in the price of match box from 25 paisa to 30 paisa will not affect its demand very much.

(i) Individual demand is the quantity of a good that a consumer is willing and able to purchase at any given price during a specified period of time. Market demand, on the other hand, is the total deman for a good in the market at a given price. Market demand is obtained by summing the quantities demanded by all the individuals in the market at a given price.
(ii) Change in demand takes place due to changes in factors other than price such as income of the consumer, price of related goods, consumer's income, taste, etc. Change in demand due to other factors is represented by a rightward or leftward shift of the demand curve. The quantity demanded of a good depends upon its own price. The change in quantity demanded is shown by an upward or downward movement along a given demand curve.

(i) Normal goods are those goods the demand for which increases as income increases, and decreases as income decreases. In other words, we buy more of these goods as our income increases. The demand curve for normal goods is positively sloped .  On the other hand, inferior goods are those goods the demand for which decreases as income increases, and increases as income decreases. The demand curve for inferior goods is negatively sloped.
(ii) Total Utility is the total satisfaction derived from the consumption of all the units of a good. Marginal Utility, on the other hand, is the additional utility derived from the consumption of one more unit of the good. Marginal Utilities of all units of consumption are added to derive Total Utility.
(iii) Individual demand schedule shows different quantities of a good demanded by an individual consumer or household corresponding to different prices. Market demand schedule, on the other hand, shows total demand for a good by all the consumers in the market corresponding to different prices. Market demand schedule is obtained by summing the quantities demanded by all the individuals at different prices.

The Marginal Rate of Substitution measures the rate at which the consumer is just willing to substitute one good for the other, maintaining the same level of satisfaction. It is the slope of the indifference curve. When a consumer gets an additional unit of one good and gives up some units of the other goods, his or her satisfaction remains the same. In this case, the utility gained is equal to the utility lost. As the amount consumed of good I increases, the Marginal Rate of Substitution between good I and good 2 diminishes. This is the law of Diminishing Marginal Rate of Substitution . .' According to Prof. Bilas, "The Marginal Rate of Substitution of X for Y (MRSxy) is defined as the amount of Y, the consumer is just willing to give up to get one more unit of X and maintains the same level of satisfaction." The Marginal Rate of Substitution can be explained with the help of the following schedule:

When consumer moves downwards along the indifference curve, the Marginal Rate of Substitution diminishes. The schedule indicates that the consumer gives up 3 bananas for getting the 2nd apple, 2 bananas for getting the 3rd apple and I banana for getting the 4th apple. This shows that the Marginal Rate of Substitution of apples for bananas goes on diminishing as more and more apples are substituted for bananas.

Consumer is in equilibrium when= \(\frac { MU_{ X } }{ { P }_{ X } } =MU_{ M }\)

If \(MU_{ M }\) rises while \({ P }_{ X }\)is constant, the consumer can maintain equilibrium only if \(MU_{ X }\) rises.This will happen when consumption of good X is decreased.

Total expenditure is the total amount spent on the consumption of a good.It is calculated by multiplying the quantity purchased with the per unit price of the good.

\({ E }_{ D }=1\) shows that with the rise in price, the total expenditure remains unchanged.The shape of the demand curve will be rectangular hyperbola.

Price elasticity of. demand is calculated as:
\({ E }_{ D }=\frac { \triangle Q }{ \triangle P } \times \frac { P }{ Q } \)
Original Price; P = Rs. 20
Original Quantity Demanded; Q = ?
Change in Price; \(\triangle \) P = (-) 1
Change in Quantity Demanded; \(\triangle \)Q = 6
Price elasticity of demand is E_D = (-) 1
By Substituting appropriate values in (I); we get
(-)1 = \(\frac { 6 }{ (-) \ 1} \times \frac { 20 }{ Q }\)
Q = 120
Therefore, at the price of Rs.20 per unit of a commodity, its quantity demanded was 120 units.

Price elasticity of. demand (E_D) is calculated as:
\({ E }_{ D }=\frac { \triangle Q }{ \triangle P } \times \frac { P }{ Q } \)
Original Price; P = Rs. 10
Original Quantity Demanded; Q = ?
Change in Price; \(\triangle \) P = (-) 2
Change in Quantity Demanded; \(\triangle \)Q = 10
Price elasticity of demand is E_D = (-) 1
By Substituting appropriate values in (I); we get
 (-)1 = \({ E }_{ D }=\frac { 10 }{ (-) \ 2} \times \frac { 10 }{ Q }\)
2Q = 100
Q = 50
Therefore, at the price of Rs.10 per unit of a commodity, its quantity demanded was 50 units.