If a firm wanted to know whether the demand for its product was elastic,unit-elastic,or inelastic,then the firm could
A) survey competitors and ask them what they think demand elasticity is for the product.
B) talk to its customers.
C) change the price a little bit and observe what happens to total revenue.
D) not do anything as there is no way to find an elasticity value.

Question

Quizplus · Accepted Answer

The most effective way to determine demand elasticity is to change the price of the product slightly and observe what happens to the total revenue. If the total revenue increases, then demand is inelastic. If the total revenue decreases, then demand is elastic. If the total revenue remains the same, then demand is unit-elastic. Surveying competitors or talking to customers may provide some insight but may not necessarily provide an accurate measure of demand elasticity. Option D is incorrect as there are ways to measure elasticity, as explained above.

If a Firm Wanted to Know Whether the Demand for Its