Summary
In this chapter, we dived into the relationship between the price of an item and the number of items being sold. We studied that different items have different demand curves, which means that in most cases, a higher price leads to the least items being sold, but this is not always the case. The relationship between price and quantity being sold can be modeled using price elasticity, which gives us an idea of how much the number of products being sold will be reduced by a given increase in the price.
We looked into the food truck sales data in order to determine the best price for each one of their items and we discovered that these items have different elasticities and that for each item, we can determine the price, which will maximize the revenue.
In the next chapter, we will focus on improving the way we bundle and recommend products by looking at how to perform a Market Basket analysis to recommend meaningful products that are frequently bought together.
