Which of the following is NOT a determinant of demand elasticity?

• A. Seasonality of demand
• B. Availability of substitutes
• C. Time horizon
• D. Brand loyalty

Answer: (C)

The idea being tested is what factors change how responsive buyers are to price changes, i.e., what makes demand elastic or inelastic.

Plenty of substitutes exist, so if the price of one product goes up, people can switch to another similar product, making demand more elastic. If buyers are strongly loyal to a brand, they remain loyal even when prices rise, so demand becomes less elastic. Demand can also vary with seasonality; in some periods people buy more or less regardless of price, which can affect how we observe responsiveness in those times.

Time horizon, in this framing, is the period over which you measure the response rather than a factor that changes the inherent responsiveness itself. While elasticity can appear different in the short run versus the long run, this question treats time horizon as not a determinant of elasticity, so the option related to time horizon is considered not a determinant.