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Why elasticity of demand should be the important factor for producers of commodities?
Elasticity of demand is crucial for producers as it measures how sensitive consumers are to price changes. Understanding this concept helps producers set optimal pricing strategies, forecast revenue changes, and make informed production decisions. If demand is elastic, a small price increase could lead to a significant drop in sales, while inelastic demand may allow for higher pricing without losing customers. Thus, recognizing elasticity enables producers to maximize profits and respond effectively to market dynamics.
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Importance of elasticity of demand?
It is important because if a company doesn't understand their product's elasticity of demand, they are screwed!
Relevance of Income elasticity of demand?
-determine the nature of the commodity -it can be applied in the intersection of marked demand and supply of commodities -help firms to respond to changing economic situations.
Why is determining demand elasticity important in economics?
What are the determined factors of price elasticity of demand
What are the 3 types of elasticity?
1)price elasticity of demand 2)income elasticity of demand 3)cross elasticity of demand
If the elasticity of demand is equal to one then the demand is?
Unitary elasticity is when the price elasticity of demand is exactly equal to one.
Why does elasticity of demand differ from other commodities?
Because it doest not relate to consumers its effects on change in price
Importance of elasticity of demand?
It is important because if a company doesn't understand their product's elasticity of demand, they are screwed!
Relevance of Income elasticity of demand?
-determine the nature of the commodity -it can be applied in the intersection of marked demand and supply of commodities -help firms to respond to changing economic situations.
How do you think producers predict elasticity of demand for a new product?
flava girls bought a pair of shoes that call demand for new prouduct...
Why is determining demand elasticity important in economics?
What are the determined factors of price elasticity of demand
What are the 3 types of elasticity?
1)price elasticity of demand 2)income elasticity of demand 3)cross elasticity of demand
If the elasticity of demand is equal to one then the demand is?
Unitary elasticity is when the price elasticity of demand is exactly equal to one.
Why is price elasticity of demand important when a country is considering devaluation of its currency?
because it is important
Distinguish between price and income elasticity of demand?
distinguish between price elasticity of demand and income elasticity of demand
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 cross elasticity of demand if two commodities are substitute and if two commodites are complement of each other?
cross effect is positive in substitution effect and negative in complementry goods
Method for measurement of Elasticity of Demand?
there are three methods of measuring elasticity of demand
