What is the business relevance of price elasticity of demand?
It is relevant as the previous answerer informs. I was in the local Co-Op last night and the managers were discussing their price reductions on the Ooops stuff they sell cheap. The reduction considered was 10p off. The senior manager had discussed the price reduction with someone at main office, and had concluded that the product would not sell at that price, but to do a calculation on where they would sell. The price for 2 Ginsters Cornish Pasties was 29p after the reduction. Which I believe is a massive 1.70 GBP reduction. This must mean that the pasties are not very popular at all, especially at the end of their date. The calculation was on Price Elasticity, of that I am sure. This demonstrates the relevance of the the price elasticity of demand.
