If a producer wants to increase revenue and knows that the good it is selling is...

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If a producer wants to increase revenue and knows that the good it is selling is...

If a producer wants to increase revenue and knows that the good it is selling is an inelastic good, which of the following should it do?

business economics

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Answer 1

Answer #1

Inelasticity results when changes in prices doesnot largely affect changes in quantity consumed.

For example, if an iPhone costs 1000$ and if now it is changed to 950$ as pricing the resultant change in quantity does not differ much because of high paying consumers who are not price sensitive .

Now in order to sell and increase revenue, the firm should focus on quality of product development like incorporating latest features with first mover advantages or marketing stunts like limited edition offer which quickly replenishing stocks and generating maximum revenue in short period of time.

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Answer 2

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