Elasticity and the business use

Question 1

How is PED used by businesses ?

Answer 1

Pricing decisions for total revenue

If PED >1 they would lower the price to increase total revenue

Use it to determine employment ,stock ,output

Question 2

How is PES used by businesses ?

Answer 2

Uses it to find ways to make supply elastic or to find ways to be flexible 2 respond to price changes

Question 3

How is XED used by businesses ?

Answer 3

Pricing decisions . E.G 2 complements , if it reduces price of A and increases the supply of B , it will increase rev and profit

Non price competition - close substitutes avoids price wars and markets substitutes less strong

Question 4

How is YED used by businesses ?

Answer 4

Pricing decisions

Planning booms and recessions , normal goods and boom = increased price to respond to demand and increase supply of to respond to it