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How we can measure Elasticity of demand
Though a manager requires an exact measure of this relationship for appropriate business decisions. Elasticity of demand is a measure that comes to the rescue of a manager here. It measures the responsiveness of demand to changes in prices along with changes in income. A manager can conclude almost exactly how the demand for his product will change when he changes his price or when his rivals alter prices of their products. He can also conclude how the demand for his product would change if incomes of his consumers go down orup. Elasticity of demand concept and its measurements are thus very significant tools of managerial decision making.
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