Answer to Question #280351 in Management for Nikolova

Question

How important is price elasticity in terms of the relationship to the revenue of a business and to the reactions of a business to changes in market conditions(such as covid-19)?

Answer 1

Price elasticity is a metric that quantifies how a product's demand fluctuates in response to price changes. It's a percentage ratio and the formula. To create price strategies, marketers must have some understanding of the elasticity of their products. If marketers believe their products' demand is inelastic, they can raise prices without concern of losing sales. However, if demand for their products is highly elastic, hiking prices could be a risky strategy. Understanding the relationship between pricing elasticity and total revenue is critical for marketers. Understanding whether a product's price is elastic or inelastic is critical for a company's marketing strategy to be successful and thrive in the marketplace. Price elasticity is a tool that marketers can use to gain a market share advantage over their competitors.