When the price of a product changes, have you ever wondered why demand shifts so dramatically? That's because of a concept called price elasticity of demand. High price elasticity means that even a small change in the price can lead to a large shift in the quantity demanded. This can completely tilt the balance of a market.
Ever wondered what those fancy economic terms mean? Let's talk about price elasticity. Specifically, what does a price elasticity of 0.3 mean?
Ever wonder why sales shift when prices change? It's all about price elasticity. Price elasticity measures how much the quantity demanded of a product changes when its price changes. If a small change in price causes a big change in how much people buy, then the demand is elastic. If a price change doesn't budge demand much, it's inelastic.
When you hear "price elasticity is high," it's all about how much folks react to price changes. Some products are sensitive to price shifts, and others aren't. When price elasticity is high, it means people will buy more or less of a product when the price changes. Think about it: if your favorite snack doubles in price, you might skip it next time.
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