price elasticity
/ˈpraɪs ˌɪlæˈstɪsəti/
Meaning
Price elasticity measures how responsive the quantity demanded of a good or service is to a change in its price. It helps businesses determine pricing strategies by showing whether a price hike will drastically reduce sales or keep them stable. The tone is technical, professional, and essential for marketing and financial analysis.
Examples
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Because our product has high price elasticity, even a minor price increase could lead to a sharp drop in sales.
Because our product has high price elasticity, even a minor price increase could lead to a sharp drop in sales.
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The marketing department is conducting a study to determine the price elasticity of our premium subscription plan.
The marketing department is conducting a study to determine the price elasticity of our premium subscription plan.
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Essential goods like medicine typically exhibit low price elasticity because consumers must buy them regardless of cost.
Essential goods like medicine typically exhibit low price elasticity because consumers must buy them regardless of cost.
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Understanding price elasticity allows us to optimize our revenue by finding the perfect price point.
Understanding price elasticity allows us to optimize our revenue by finding the perfect price point.
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The price elasticity of demand for luxury cars tends to be highly sensitive to broader economic downturns.
The price elasticity of demand for luxury cars tends to be highly sensitive to broader economic downturns.
Common Mistakes
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✗ The product has a very elastic price, so we shouldn't change it.
✓ The product has high price elasticity, so we shouldn't change the price.
Price elasticity is a noun phrase representing the concept. The product itself is 'price-elastic' (adjective), or it 'has high price elasticity'.
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✗ We need to calculate the price elasticity of our customers.
✓ We need to calculate the price elasticity of demand for our product.
Price elasticity applies to the 'demand' or 'supply' of a product, not to the customers themselves.
Related Expressions
Practice
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Products with low ___ are generally unaffected by minor price increases.
💡 The measure of how demand changes when prices change.
Show answer
price elasticity
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We need to analyze the ___ of our software licenses before raising the annual fee.
💡 A key economic metric for pricing strategy.
Show answer
price elasticity