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Elasticity
Definition
A measure of how sensitive consumer demand is to changes in price, indicating the degree to which sales volume increases or decreases when price changes. Elasticity helps assess the expected impact of pricing and promotional decisions.
How It's Calculated
% Change in Units Sold ÷ % Change in Price
Example
A snack brand reduces price by 10% and sees unit sales increase by 20%, resulting in an elasticity of -2.0, indicating relatively high price sensitivity.
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