If a firm is successful in its efforts to reduce the price elasticity of demand for its product,all else constant,the optimal markup that can be used in setting price will increase.

Question

Quizplus · Accepted Answer

If a firm is successful in reducing the price elasticity of demand for its product, it means that consumers are less responsive to price changes and are willing to pay a higher price for the product. This allows the firm to increase the optimal markup in setting prices without affecting sales volume significantly. Therefore, the statement is true.

If a Firm Is Successful in Its Efforts to Reduce