What aspect of consumer behavior does price elasticity focus on?

Price elasticity specifically examines how consumers respond to changes in price. This concept measures the sensitivity of demand for a product or service when there is a price increase or decrease. If a product is highly elastic, even a small change in price can result in a significant change in the quantity demanded. Conversely, if a product is inelastic, demand remains relatively stable despite price fluctuations.

Understanding price elasticity is essential for businesses and marketers because it allows them to predict consumer behavior, set pricing strategies, and make informed decisions about promotions and discounting strategies. By focusing on consumer responses to price changes, organizations can align their pricing with consumer expectations and optimize sales and revenue outcomes.