Fin Alalysis
Price Decisions
Price elasticity refers to how a price change affects a company’s change in sales and profit. It is the measure of the magnitude by which consumers change the quantity of some product they purchase in response to a change in the price of that product. The more elastic demand is the more reactive consumers are to any change in the price. If demand is inelastic, consumers are still relatively likely to purchase the product. Price elasticity of demand can be greater than 1, which makes the price elastic. When the elasticity of demand is less than 1 the price is said to be inelastic.
With that being said in determine if Dakota Publisher’s price is elastic or not I looked at the average sales and price of each book. I divided the percentage of change in quantity purchased by the percentage of change in price, and came up with 1.656. Since the answer was over 1 the product is said to be elastic.
If I were selling these books I would leave the price low.......
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