why is the knowledge of price elasticity of demand and its determinants important?

Answer 1

Because econometric modeling does a much better job of estimating the elasticity of demand than the actual demand function. And because that study allows demand to take many forms beyond the straight line taught in Econ 101 (which is a simplification of actual demand functions as a way to assist in teaching students).

Answer 2

Price elasticity of demand is a calculation of how a change in price will change the demand of a product or service.

A determinate is what makes it elastic or inelastic. If it is elastic, the demand will change when the firm changes the price. If it is inelastic the demand will not change. A determinate might be something like electrical power. Let's face it.... we run on electricity and a small change in price is not likely to affect how much we purchase. On the other hand, if the price of beef goes up a great deal, people will substitute poultry and fish, so the demand for beef is likely to drop. Why? Because there are reasonable substitutes for the product.

Best Wishes,

Sue

Answer 3

it rather is sturdy so as to grant the fee externialities of the industry place that are inelastic because of the the 1929 disaster which stopped bread from being with butter. Its sparkling that by making use of understanding the call for of elasticity, you may then make an elastic band that's greater elastic than the others, so as which you have an inelastic sturdy, that's rather elastic.