MIT economist Jerry Hausman has estimated the price elasticity of demand for Post Raisin Bran cereal to be -2.5 and the price elasticity of demand for all types of breakfast cereals to be -0.9 . The demand for Post Raisin Bran cereal is , and the demand for all types of breakfast cereals is

Price elasticity of demand measures how sensitive the quantity demanded of a good is to a change in its price. With a price elasticity of -2.5 for Post Raisin Bran cereal, this indicates that for a 1% increase in price, the quantity demanded would decrease by approximately 2.5%. This suggests that Post Raisin Bran has a highly elastic demand; consumers are likely to switch to alternatives if the price rises. On the other hand, the price elasticity of demand for all types of breakfast cereals is -0.9, indicating that demand for cereal as a whole is inelastic. This means that a 1% increase in the price of breakfast cereals would result in only a 0.9% decrease in the quantity demanded. Consumers are generally less responsive to price changes for broad categories like breakfast cereals, likely due to the necessity of breakfast and the lack of close substitutes for the overall category.