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How does elasticity affect pricing decisions fo... - SS2 Economics Concept of Elasticity And Its Application Question

How does elasticity affect pricing decisions for firms?

A

If the elasticity of demand for a product is low, firms may choose to increase prices to increase demand.

B

If the elasticity of demand for a product is high, firms may choose to keep prices low to increase demand.

C

Elasticity has no effect on pricing decisions for firms.

D

Firms always choose to keep prices high to increase profits.

correct option: b
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