It is very important for the seller of a good to know whether the good is elastic, unit elastic, or inelastic in demand so that she will know what will happen to total revenue when she changes the price of the good.

Question

Quizplus · Accepted Answer

Understanding the elasticity of demand for a product helps the seller predict how changes in price will affect total revenue. If demand is elastic, a price increase could lead to a decrease in total revenue, while if demand is inelastic, a price increase might increase total revenue.

It Is Very Important for the Seller of a Good