What is the price elasticity of the offer?

Sometimes it is simply referred to as a dog, the price elasticity of the offer has to do with how react manufacturers are to change the prices of goods and services offered. The higher value indicates increased sensitivity in that the increase in price is likely to increase the available offer. The lower value is used to indicate that the change in the price is unlikely to have a small or no effect on the amount of goods and services that will be available to consumers. From this point of view, the price elasticity of the offer allows you to find out how the offer is affected or down. For example, if the seller of a series of high quality brand suits decides to increase the cost of these suits by 20%, there is a great chance that the consumption of products will move to less known brands that find out that they have similar quality and will also become cheaper. Here the price is considered infinite, because the change in the price causes that the offer increases, how sales in the lawsuits begin to decrease.

At the same time, the price elasticity of supplies to goods and services that consumers consider to be basic to experience a very small change in the offer due to an increase in price. A company that produces a well -known range of canned vegetables may decide to increase the cost of a can by 10% and see little to change in the number of units sold. Here, price elasticity is considered higher, because the increase in price did not have a real impact on consumer shopping habits.

Manufacturers pay increased attention to the cost -effectiveness of supplies as a means to determine how much they can charge for different products, they affect sales data and find themselves with more supplies or delivery at hand than to be deemed fair. Together with the use of this approach to price measurement, it is correct to determine the price of the offer in the adjustment of price quotas to match the expected demand for the product. This means that if the manufacturer finds fromIt is how to significantly reduce the production costs of the item, and decide to reduce the unit price for consumers, it is possible to predict the impact that this will have on demand. The manufacturer, in turn, can adjust the speed of production, so there is a reasonable supply at hand to use increased demand.