Abstract:

The aim of this paper is to prove a common assumption that the price elasticity of demand for staple food is inelastic. This inelasticity represents only a weak buyer reaction, reflected in a certain quantity of goods being demanded, in relation to the change in a selling price. Price elasticity is very often studied on the aggregate level. But the knowledge of price elasticity of demand is mostly important for the seller, even more so if he wants to encourage customers to buy more, through flyer campaigns. The data analysis is based on the calculation of the price elasticity of demand as arc price elasticity of food range on the sample offered over five-year period, from 2008 to 2012 in a shop that is a part of a Czech retail chain. Basically it is focused on the most mostly purchased item in the food range, which is bread. The analyzed sample represents 23 sorts of breads, together made up the total assortment of bread on offer in the shop. Despite the fact that the theory of price elasticity of demand is well known, a number of studies cited show that the real value of price elasticity of demand for individual items of food is limited. The results of such research, which form the theoretical background of this article, were compared with the computed values of price elasticity of demand in the studied sample.