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October 2, 2014

Homework Help: Advanced Microeconomics College Level

Posted by Kathy on Saturday, July 9, 2011 at 12:48pm.

Information on the price elasticity of demand is particularly importatn to managerial decision making because:
A) the higher the price elasticity of demand for a product is, the more profitable it will be to produce more of it.
B) depending on the elasticity coefficient, decision makers will immediately know if a price change will cause profits to increase or decrease
C) it allows one to predict how total revenue will respond, i.e., increase or decrease, to a change in price.
D) as the price elasticity coefficient approaches one, profits will increase.

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