How does elasticity affect the pricing strategies of companies? Explain with examples.
Elasticity in simple terms can be defined as the degree of responsiveness of the quantity demanded change with respect to change in price
This strategy is used by many of the companies to tackle the different type of demands according to situation needed
Now elastic demand is the demand in which there is a high degree of responsiveness in the change of quantity demanded with respect to change in price
let's clear it with an example say a company deals in health supplement stores so they know that if they have a reasonable price at most of the consumer can pay, then the quantity demanded will be more and vice versa is also true
The above situation follows the law of demand which is that is ceteris paribus quantity demanded is directly related to change in price
How does elasticity affect the pricing strategies of companies? Explain with examples.
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