Economics Assessment Assignment Example | Topics and Well Written Essays - 1500 words - 1

Economics Assessment - Assignment Example For the purpose of this study we have used a product as a guinea pig. In order to understand the impact of the product in its related market and the impact of the market on the product, we have carried out further analysis using the established theories of economics about the future viability of the product. Here for the sake of this analysis we have used the potato chips product manufactured by the Coca Cola Company called LAYS. (Lipsey and Chrystal, 2002) The price elasticity of demand is defined as the magnitude of the proportionate change in demand and the proportionate change in price of the product. Therefore, elasticity is the measure of responsiveness. Price elasticity of demand is a very important concept that is related to the pricing decisions of a product. If an organization wants to generate the maximum amount of revenue from its products and it is unable to determine how much increase in the price can be made by them so that the overall demand of the product does not reduce. This decision is taken on the basis of the analysis of price elasticity of demand. The price elasticity of demand can be described as the rate of response of quantity demanded due to a price change. This means that if a unit change in the price of the produc