a. Explain why price elasticity of demand is important for firms to consider when setting their prices to ensure that they maximize their profits.
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Answer:
When the demand is elastic a price increase will always decrease the quantity sold and decrease the total revenue. ... The price for achieving maximum profits is always greater than or equal to the price that maximizes revenues.
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Explanation:
When the demand is elastic a price increase will always decrease the quantity sold and decrease the total revenue. ... The price for achieving maximum profits is always greater than or equal to the price that maximizes revenues
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