Question

If you were shopkeeper in your village how will you use the concept of price elasticity do demand to determined price of a commodity?

Answer 1

Answer:

if material that to be sold is in less quantity then the price of the product will increase.

Explanation:

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Answer 2

The price determination ideally depends on if the price elasticity of demand is considerably high or relatively low among the consumers or buyers in the concerned market.

Explanation:

• Price elasticity of demand basically shows the responsiveness or sensitivity of general consumers or buyers towards a certain price change of any commodity/good or service.
• A higher price elasticity of demand basically implies that consumers or buyers have a relatively high responsiveness or sensitivity towards any certain price change of any product or service and lower price elasticity indicates a relatively lower price responsiveness or sensitivity of the consumers or buyers.
• Therefore, charging an excessively high price for any product or service would result in considerable loss of consumers/buyers and revenue as well if the consumers or buyers are highly price responsive or sensitive or the price elasticity of demand for the specific product or service is fairly high.
• On the other hands, offering a price that is too low, provided that the consumers or buyers are not that much price sensitive or responsive or the price elasticity of demand is relatively low, then the shopkeeper might loose the opportunity to gain higher revenue by charging relatively higher price,as the consumers or buyers are not much concerned or sensitive about any price level of the concerned commodity or service.
• Therefore, as a general rule, the shopkeeper can charge a relatively lower price for his or her goods and services if the price elasticity of demand is considerably high and a comparatively higher price if the price elasticity of demand is relatively low.