In retail, the elasticity coefficient refers to a measure of the responsiveness of demand for a product to changes in its price. It quantifies the degree to which the quantity demanded changes when the price of a product changes. The elasticity coefficient is calculated by dividing the percentage change in quantity demanded by the percentage change in price.
If the coefficient is greater than 1, demand is considered elastic, meaning that a small change in price leads to a relatively larger change in quantity demanded. On the other hand, if the coefficient is less than 1, demand is considered inelastic, indicating that quantity demanded changes minimally in response to price changes. Understanding elasticity helps retailers determine optimal pricing strategies and forecast the impact of price adjustments on consumer demand.
