Knowing the price elasticity of demand is important in business because:
A)it allows a manager to determine whether a price increase will cause total revenue to rise or fall.
B)it allows a manager to determine whether an increase in supply will cause total profit to rise or fall.
C)it allows a manager to determine how to maximize the firm's profits.
D)it allows a manager to determine whether a price increase will cause the demand to rise or fall.

Question

Quizplus · Accepted Answer

Knowing the price elasticity of demand helps a manager understand how responsive consumers are to changes in price, which in turn helps the manager make informed decisions about pricing strategies that will either increase total revenue or minimize decreases in revenue.

Knowing the Price Elasticity of Demand Is Important in Business