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How does price elasticity of demand affect a firm's pricing decisions?
Wiki User
∙ 13y ago
The price elasticity of demand affects a firm's pricing decisions by determining the optimal profit margin. Price elasticity of demand describes the rate of change of demand in response to a change in price. The higher it is, the higher demand changes in respond to price; lower means very little change. For a good with low elasticity, it is easier to profit off marking-up the price because demand falls little in response to a price increase. For a high elasticity, prices should approach equilibrium because straying from equilibrium results in a higher change in demand than in price.
Wiki User
∙ 13y ago
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How the elasticity of demand affect managerial decisions?
Elasticity of demand affects managerial decisions because the demand of a product changes with the wrong business decision. Managers must be careful about what they choose to do with their products.
What is role of price elasticity of demand in business decision?
role of price elasticity of demand in managerial decisions
How does elasticity affect a companys pricing policy?
If demand is elastic at the current price, the company knows that an increase in price would reduce total revenues.
How can brand loyalty affect elasticity of demand?
Demand, perceived value, overall reputation
Which of the following is not an example of pricing based on group differences in elasticity of demand?
Cash rebates for purchases of automobiles.
How the elasticity of demand affect managerial decisions?
Elasticity of demand affects managerial decisions because the demand of a product changes with the wrong business decision. Managers must be careful about what they choose to do with their products.
What is role of price elasticity of demand in business decision?
role of price elasticity of demand in managerial decisions
How does elasticity affect a companys pricing policy?
If demand is elastic at the current price, the company knows that an increase in price would reduce total revenues.
How can brand loyalty affect elasticity of demand?
Demand, perceived value, overall reputation
Which of the following is not an example of pricing based on group differences in elasticity of demand?
Cash rebates for purchases of automobiles.
Which factor does not affect the elasticity of demand for a good?
An increase in population
What factor does not affect the elasticity of demand for a good?
Increase in the population.
What is the importance of price elasticity of demand in decision making with regards to choosing the best pricing strategy to maximize revenue?
Supply + Demand = Price
Significance of elasticity of demand?
Elasticity of demand will help managers determine what behaviors affect customer's buying behavior. Price elasticity will tell managers whether they can change the price of products or not.
What is Ramsay pricing?
it assigns costs based on the price elasticity of demand. het higher the elasticity (elastic), the lower the charge of fixed costs when allocated amongst products.
What factor affect price?
What factors usually affect pricing?
What factors affect elastic of demand?
There are plenty of factors affecting elasticity of demand including climate of the area. Other factors that effect elasticity of demand include supply and group of people buying.
