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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