Which of the following factors increases Price Elasticity of Demand (PED)?

The factor that increases Price Elasticity of Demand (PED) is a noticeable difference in product pricing. When consumers observe a significant price difference between similar products or services, they are more likely to react to price changes. This is because they can easily see the value proposition of choosing one option over another. If one product is priced much lower than a comparable alternative, consumers may choose the cheaper option, demonstrating higher elasticity in their demand compared to a situation where prices are more similar or where the products are perceived as less substitutable.

In contrast, a lack of substitutes and a necessity of a product generally lead to lower elasticity. When there are few substitutes available, consumers have less flexibility to switch away from a product even if prices change. Similarly, if a product is considered a necessity, consumers are likely to buy it regardless of price increases, resulting in more inelastic demand. Limited availability of substitutes reinforces this concept, as it restricts consumer options and contributes to a more inelastic demand curve.