Learning objectives
Calculate price elasticity of demand as % change in quantity demanded ÷ % change in price and interpret elastic, inelastic and unit-elastic values.
Calculate income elasticity and promotional elasticity of demand and interpret their sign and size.
Analyse how elasticity estimates inform decisions on price, sales revenue, product range and promotional spending.
Evaluate the limitations of elasticity, such as the assumption that other factors stay constant, changing market conditions and unreliable data.
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