Consider firms that introduce new products, such as DVDs in 2001. When firms introduce new products, Firms with new products often estimate price elasticity of demand by experimenting with different prices.
Why is it crucial for a company to understand the demand's price elasticity for the product it is selling?
Elasticity is a crucial economic metric because it shows how much of an item or service consumers consume when the price varies, which is especially essential for businesses that sell goods or services. When a product's price changes quickly, the amount that is demanded also changes.. When a good's demand is inelastic, its supply does not change significantly even when its price does.
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