Which of the following explains why a firm would be interested in knowing the price elasticity of demand for a good it sells?
A) The price elasticity of demand can be used to determine the impact of changes in income on quantity sold.
B) Knowing the price elasticity of demand allows the firm to determine how the cost of producing additional units of the good will change.
C) Knowing the price elasticity of demand allows the firm to calculate how changes in the price of the good will affect the firm's total profit.
D) The price elasticity of demand allows the firm to calculate how changes in the price of the good will affect the firm's total revenue.
Correct Answer:
Verified
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