pricing elasticity

Price elasticity refers to how sensitive the demand for a product is to changes in its price. If a small price change significantly affects the quantity people buy, the product is considered elastic. Common examples include luxury items like designer clothing. Conversely, if demand changes little despite price changes, the product is inelastic, such as essential medications. Understanding price elasticity helps businesses set prices effectively and predict consumer behavior in response to price changes. It ultimately informs decisions about supply, pricing strategy, and market entry.