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8 September, 10:37

Knowing a product's price elasticity allows economists to:

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  1. 8 September, 10:39
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    The measure of the relationship between a change in the quantity demanded of a product and a change in its price is called price elasticity. Since profit is equal to total sales minus total costs, profit will increase as the price is increased or when the demand for a product is inelastic. It is therefore important for the economists to know a product’s or a service’s elasticity in order to set their prices in such a way that they can maximize their revenues and profits.
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