Question

Analyse how an increase in the price elasticity of demand (PED) and the price elasticity of
supply (PES) of its products could benefit a firm.

Answer 1

Answer:

If a firm wishes to increase market share and increase its sales then price elastic means that cuts in price will beneficial in increasing sales. If a firm is producing a good with economies of scale. Cutting prices will enable lower average costs because output can increase, this could even increase profitability.

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