Final answer:
The price elasticity of demand measures the responsiveness of demand to changes in price. Brompton should determine the elasticity of demand for their core product in the U.K. market to make a decision about reducing the price. More information and research are needed to determine the price elasticity of demand for Brompton bikes.
Step-by-step explanation:
The price elasticity of demand measures the responsiveness of demand to changes in price. If the elasticity of demand is greater than 1, demand is considered elastic, meaning that a small change in price will result in a proportionally larger change in quantity demanded. If the elasticity is less than 1, demand is considered inelastic, meaning that a change in price will have a relatively smaller effect on quantity demanded.
In the case of Brompton bikes, the price elasticity of demand for their core product in the U.K. market would determine whether they should reduce the price. If their product has an elastic demand, reducing the price could lead to a significant increase in quantity demanded and potentially increase overall revenue. However, if the demand is inelastic, reducing the price may not have a substantial impact on quantity demanded.
To determine the price elasticity of demand for Brompton bikes, we would need more information such as historical sales data, pricing data, and market research. Case study materials and research on consumer preferences and behavior in the bicycle market would also be helpful in understanding the potential elasticity of demand for Brompton bikes.