Price elasticity of demand refers to the sensitivity of demand for a product to changes in its price. In other words, it measures how much the quantity demanded of a product changes when its price changes. Here's why it's important for businesses:

• Price optimization: By understanding the price elasticity of demand for their products, businesses can optimize their pricing strategy to maximize revenue and profits.
• Competition: Knowing the price elasticity of demand for a product can help a business understand how its price compares to its competitors and how a change in price will affect demand.
• Marketing: Understanding price elasticity can help businesses make informed decisions about advertising and promotion, and determine the most effective strategies for increasing demand and sales.
• Pricing strategy: Price elasticity of demand can also help businesses determine whether they should use price discounts, price increases, or price bundling to achieve their sales goals.