Author Question: Many products are in the maturity stage of the product life cycle. Indicate whether the statement ... (Read 144 times)

nenivikky · **on:** Jun 29, 2018

Many products are in the maturity stage of the product life cycle.

Indicate whether the statement is true or false

Question 2

Explain what is meant by price elasticity of demand.

durant1234 · **Reply #1 on:** Jun 29, 2018

Answer to Question 1

True

Answer to Question 2

Price elasticity of demand provides a measure of the sensitivity of consumer demand for a product or product category to changes in price. Elasticity is formally defined as the percentage change in quantity demanded relative to a given percentage change in price. For a product with highly elastic demand, a relatively small increase in price results in a huge change in quantity sold. Non-essential items or those with ready substitutes tend to have more elastic demand. If marketers can determine the price elasticity of demand for a product, setting a price is easier. By analyzing total revenues as prices change, marketers can determine whether a product is price elastic. Total revenue is price multiplied by quantity. If demand is elastic, a shift in price causes an opposite change in total revenue: An increase in price will decrease total revenue, and a decrease in price will increase total revenue. The following formula determines the price elasticity of demand: price elasticity of demand = change in quantity demanded/ change in price.