Understanding Elasticity in Business: Price and Income Elasticity of Demand

The video tutorial covers the concept of elasticity in business, focusing on price elasticity of demand (PED) and income elasticity of demand (YED). It explains how these elasticities measure the responsiveness of demand to changes in price and income, respectively. The tutorial also discusses factors influencing elasticity, such as product differentiation and brand loyalty. Additionally, it highlights the importance of understanding elasticity for business strategies, particularly in pricing and product portfolio management during different economic conditions.

What is the income elasticity of demand (YED) and how is it calculated?

Differentiate between inferior goods, normal goods, and luxury goods based on YED.

How can understanding elasticity help businesses in their pricing strategies?