Which of the following observations is true of price elasticity?
A)Price elasticity is only affected by demographic factors,not psychological factors.
B)Price elasticity is a measure of consumers' price sensitivity.
C)The estimation of price elasticity from historical data is an expensive approach and is not limited to the consideration of price changes.
D)Crude estimates of price elasticity are not useful to pricing decisions.

Question

Quizplus · Accepted Answer

Price elasticity is a measure of how responsive consumers are to changes in the price of a product or service. It helps businesses understand how sensitive customers are to price changes, and can inform pricing decisions and marketing strategies. Options A, C, and D are not accurate. While demographic factors can impact price elasticity, psychological factors such as brand loyalty and perceived value also play a role. Estimating price elasticity from historical data can be a cost-effective approach, and while crude estimates may not be as accurate as more precise calculations, they can still be useful for informing pricing decisions.

Which of the Following Observations Is True of Price Elasticity