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THE FINANCE GHOST: Price elastic ain’t fantastic

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Poultry and fishing companies, choking back rapidly rising input costs, are sitting ducks in this tough environment. For luxury goods firms such as Ferrari, it’s the exact opposite

If you studied economics at university, you may remember a section called “elasticity of demand” — a concept that’s far more important to businesses than most people realise. If you didn’t have any economics subjects at university, now is your chance to catch up.

Price elasticity of demand is calculated as the percentage change in quantity of items sold divided by the percentage change in price. That sounds complicated, but you already know the basic principle here: as the price goes up, volume usually drops. This is because supply and demand are linked, a fundamental law of microeconomics. Of course, every law has examples of products that break it...

 

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THE FINANCE GHOST: Price elastic ain’t fantasticPoultry and fishing companies, choking back rapidly rising input costs, are sitting ducks in this tough environment. For luxury goods firms such as Ferrari, it’s the exact opposite
Fonte: FinancialMail - 🏆 20. / 63 Leggi di più »