Activity – Elasticity, Total Revenue, and Optimal Pricing

Elasticity, Total Revenue, and Optimal Pricing

The concept of elasticity can help managers make crucial decisions regarding the firm’s total revenue.

The following video discusses such a topic.

After reviewing the video, attend the class and be able to explain:

  • How price elasticity of demand is measured.
  • Given price elasticity and marginal cost of the firm, how to calculate the optimal price for the firm.
  • The relationship between elasticity and total revenue.
  • How an increase in price can lead to an increase (decline) in total revenue, utilizing an elasticity figure.

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