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Should a business raise prices if it wants to increase revenues if the price elasticity for a product is under 0?
Wiki User
∙ 13y ago
no i think it's unfair because then when their rates go down we have to pay more unless their going out of business.
Wiki User
∙ 13y ago
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Importance of cross elasticity of demand?
Cross elasticity of demand is sometimes written as XED. In business the cross elasticity of demand is important because it will help determine whether or not it is a good move to increase or decrease prices or to substitute one product for another for the purpose of revenue.
What is the Significance of cross elasticity in business decision making?
The degree of change in the demand for one product as a response to a change in the price of a different product. For example, an increase in the price of petroleum is likely to have a negative impact on the demand for gas-guzzling vehicles and a positive impact on the demand for fuel-efficient vehicles. The cross elasticity for substitutes is generally positive, in that a price increase for one product will result in an increase in demand for a substitute.
Income elasticity of demand?
The Income Elasticity of Demand is used to measure how an increase or decrease in the income of consumers affects the demand for a particular product. This relationship varies depending on the type of goods.
If the income elasticity of demand for a product is -0.5 then?
Income Elasticity:Income Elasticity of Demand is measure of percentage change in demand for a commodity due to 1% change in income of consumers. Negative Income Elasticity :Increase in Income of consumers lead to decrease in the quantity demanded for a commodity.Example: unbranded items.so if Income Elasticity for product is -0.5 then its demand will be decreases as Income of consumers increases.
What is environmental elasticity?
Environmental elasticity is the responsiveness of demand for a product to a change in the environmental impact of the product.
What are revenues?
Revenues = Sales Revenue is the amount of money charged for the usual product or services sold by a business.
Importance of cross elasticity of demand?
Cross elasticity of demand is sometimes written as XED. In business the cross elasticity of demand is important because it will help determine whether or not it is a good move to increase or decrease prices or to substitute one product for another for the purpose of revenue.
What is the Significance of cross elasticity in business decision making?
The degree of change in the demand for one product as a response to a change in the price of a different product. For example, an increase in the price of petroleum is likely to have a negative impact on the demand for gas-guzzling vehicles and a positive impact on the demand for fuel-efficient vehicles. The cross elasticity for substitutes is generally positive, in that a price increase for one product will result in an increase in demand for a substitute.
How do the indirect taxes affect the private business?
Indirect taxes causes an increase in prices... But, first we would see the price elasticity of the product, that the business sells. If the price elasticity is high, then, the increase in prices would result in less sales. resulting in low profits. On the other hand, if the price elasticity is low, it would not affect the business much. This is because the product would be in demand and people would be buying it because it costs a small proportion of the income or it is a basic necessity, for example: Bread. For this business, there would be a very small change in sales revenue and hence, profits.
What does surplus mean within a business?
Surplus mean excess in business. A business can have a surplus of product in its inventory, which isn't good for revenues.
What firms could raise prices and expect an increase in revenus?
a firm whose product has an elasticity of 0.31
Income elasticity of demand?
The Income Elasticity of Demand is used to measure how an increase or decrease in the income of consumers affects the demand for a particular product. This relationship varies depending on the type of goods.
If the income elasticity of demand for a product is -0.5 then?
Income Elasticity:Income Elasticity of Demand is measure of percentage change in demand for a commodity due to 1% change in income of consumers. Negative Income Elasticity :Increase in Income of consumers lead to decrease in the quantity demanded for a commodity.Example: unbranded items.so if Income Elasticity for product is -0.5 then its demand will be decreases as Income of consumers increases.
What is environmental elasticity?
Environmental elasticity is the responsiveness of demand for a product to a change in the environmental impact of the product.
What is the lowest elasticity of demand?
The lowest elasticity of demand is when no change in price, whether increase or decrease, changes the demand for a product.Ê It's used by economists to predict how sensitive a product is to a price change.
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.
Explain the effects of a rise in the price on market when the price elasticity of demand for product is inelastic?
Revenue of the producer will increase since there will be no change in quantity demanded.
