For entrepreneurs, knowing the elasticity of their products can impact various aspects of their business:
1. Pricing Strategy: If a product is price elastic, a small change in price could lead to a significant change in demand. Conversely, for inelastic products, demand remains relatively stable despite price changes.
2. Revenue Forecasting: Understanding PED helps in predicting how changes in price will affect revenues and profit margins.
3. Market Segmentation: Different segments of the market may exhibit different price elasticities. Entrepreneurs can tailor their pricing strategies to target these segments effectively.