Why is the price elasticity of demand an import... - SS2 Economics Concept of Elasticity And Its Application Question
Why is the price elasticity of demand an important concept for firms?
The price elasticity of demand is important for firms because it helps them make pricing decisions. If the elasticity of demand for a product is high, a small increase in price will lead to a large decrease in demand. Therefore, firms may choose to keep prices low in order to increase demand and maximize profits.
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