Kushal Works

 Both producers and policymakers can benefit greatly from understanding the idea of flexibility. Determining the degree of a price increase or drop in order to achieve a desired change in the quantity requested for the goods and services in the company or the economy is a highly useful tool. The following application will demonstrate the concept's practical importance. 1. Price fixation: An understanding of demand elasticity may aid a businessperson in deciding whether to lower or raise the price of his product or to pass along any additional manufacturing costs to customers by charging a high price. Under conditions of monopoly and imperfect competition, each vendor must consider the elasticity of demand when determining the price for his or her offering. He may set a higher price if there is an inflexible demand for the good. 2. Production: A businessperson can decide on production with the help of demand elasticity. The elasticity of demand for diverse products helps a businessm...