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Decision Making Under Uncertainty
Demand Elasticity Analysis
Measures the responsiveness of quantity demanded to changes in price, income, or the price of related goods, crucial for pricing and marketing strategy. ✨
Article Points:
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Price Elasticity of Demand (PED): How much demand changes with price.
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Elastic demand (|PED| > 1) means a price increase decreases total revenue.
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Inelastic demand (|PED| < 1) means a price increase increases total revenue.
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Income Elasticity of Demand (YED): How much demand changes with consumer income (normal vs. inferior goods).
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Cross-Price Elasticity of Demand (XED): How much demand for one good changes with the price of another (substitutes vs. complements).
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Understanding elasticity helps optimize pricing, identify product differentiation opportunities, and analyze competitor impact.
Source:
Demand Elasticity Analysis
Demand Elasticity Analysis
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Source:
Demand Elasticity Analysis
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