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?
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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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