A mass produced gold statue sold on the streets of Italy has a relatively higher price elasticity of demand, whereas fine art has relatively lower price elasticity - the number of buyers of Picasso stay fairly the same if the price doubles. Why is there a difference?

Gold is a scarce resource. It is not readily available to a lot of people. The demand for gold and gold products is also not as high as that of other common materials like cotton, wood, plastic, etc. It is, therefore, expected that the price of a product made out of gold is higher than that of a similar product made out of common materials. A good example is the one provided of a gold statue and a piece of fine art.

Since the prices of gold products are high, a change in the price of the product might see a significant fall in demand for the product. However, the prices of pieces of fine art are relatively low. Therefore, a significant change in price will only see a small change in the demand for the same pieces.