Demand AnalysisPrice Elasticity and Decision MakingSummaryAll consumers should be aware of the factors involved in price elasticity and the potential impact of these characteristics on their purchases and their personal or business budgets. Business enterprises have the problem of managing the price elasticity of their products and their prices and governments have a constant problem of determining taxes from price elasticity. I used three examples to try to understand how companies manage their products considering price elasticity with Proctor & Gamble, the oil and airline industries. I used government examples of data collection attempts to formulate their policies for taxing elastic and inelastic products, while describing how the U.S. Postal Service uses price elasticity to compete with corporate competition. Exposure to these price elasticity factors will make consumers aware of the role of businesses and governments in determining goods or services at a particular price. Submit an article of approximately 1,500 words answering the following question: Analyze why the concept of price elasticity is important to (a) business and (b) government? Price elasticity is the measure of consumers' responsiveness to changes in the price of a product or service. Evaluating and considering this metric is a useful tool for businesses making pricing and production decisions, as well as governments making revenue and regulatory decisions. “Price elasticity is influenced by measurable factors that allow managers to understand demand and prices for their product or service; including the availability of substitutes, consumers' budgets for the product or service, and the time frame for demand adjustment. Proper consideration of price elasticity allows managers to set prices such that the effect on total income is predictable and adjustments in production are timely. The concept of price elasticity is used in the management of commercial enterprises and government. Business companies use price elasticity to manage pricing and production decisions, especially in industries where sales and revenue growth is the primary measure of a company's success. Knowing the price elasticity of a product or service allows managers to determine the pricing strategy required to achieve the desired sales results. For example, a company offering a product with relatively high elasticity would know that a large increase in sales can be created with a slight decrease in price. Conversely, a company with an inelastic product knows that price changes would have a minimal effect on sales..