Consumer Behavior and Price Elasticity

Consumer behavior refers to the decisions people make when purchasing goods and services. It considers factors like preferences, motivations, and influences from culture or marketing. Price elasticity measures how sensitive consumers are to price changes. If a small price change leads to a significant change in buying habits, the product is considered elastic (like luxury items). Conversely, if demand remains relatively stable despite price changes, it’s inelastic (like necessities). Understanding these concepts helps businesses and economists predict how changes in prices affect consumer demand and overall market dynamics.