Which of the following is a formal method for incorporating demand into prices?
A) Cost-based pricing
B) Market-based pricing
C) Price elasticity of demand
D) Price elasticity of supply

Question

Quizplus · Accepted Answer

Price elasticity of demand is a formal method for incorporating demand into prices. It is a measure of how sensitive the quantity demanded of a good is to changes in its price. By considering price elasticity of demand, firms can adjust their prices in such a way that they can optimize their profits. Cost-based pricing and market-based pricing are not specific methods for incorporating demand into prices. Price elasticity of supply focuses on how quantity supplied changes in response to changes in price, not demand.

Which of the Following Is a Formal Method for Incorporating