Why does the elasticity in this case increase and then decrease?
Why does the elasticity in this case increase and then decrease? I think if brand 4 increases in price, then brand 5 will sell more.
1 answers ( 0 marked as helpful)
Hi Hoai,
thanks for reaching out! When it comes to analyzing the chart we concentrate in the domain of prices for brand 4 - 1.76$ - 2.26$. In this domain the price elasticity is steadily decreasing. And you're correct - the increase in price for the cross brand 4 would lead to more sails in our brand 5.
The rest of the chart does indeed show some fluctuations in the price elasticity, but without any data we can't be sure, it's most likely not an accurate representation.
Hope this helps!
Best,
365 Eli