Price Elasticity

A measure of customer responsiveness in terms of demand for a certain product or service by adjusting the product or service price. More specifically, it provides the percentage of quantity demanded for a product or service in response to a one percent change in price.

Deeper Insights

The equation for Price Elasticity of demand (Ed) is: Ed=(Q2-Q1)/Q1/(P2-P1)/P1

Where: Ed= Price elasticity of demand, Q1= Quantity demand before change, Q2= Quantity demand after change, P1= Price before change, and P2=Price after change

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Related Keywords: Price Point, Price Stability, Pricing Tool, Pricing Strategy