GK
MARKETING MANAGEMENT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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When the demand of a product is inelastic, the firm is in a position to fix ____ prices.
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Higher
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Lower
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Similar
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Competitive prices
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Explanation:
Detailed explanation-1: -However, price increases typically do lead to a small decrease in quantity demanded. This means that firms that deal in inelastic goods or services can increase prices, selling a little less but making higher revenues.
Detailed explanation-2: -If PED is inelastic, then firms are more likely to increase prices. This is because they know that sales are not likely to fall by much. The price increase is more significant than the fall in demand. So this will lead to higher revenues.
Detailed explanation-3: -An inelastic demand is one in which the change in quantity demanded due to a change in price is small.
There is 1 question to complete.