Answer to Question #301495 in Economics of Enterprise for Mark

Question

As economic/business consultant to the dominant firm in a particular market, you have discovered that, at the current price and output, demand for your customers’ product is price inelastic. What advice regarding pricing would you give to management? Explain.

Answer 1

I would advise them to raise their prices to earn more revenue as the raise will have an insignificant impact on the quantity demanded