elasticity business use and limitations

Question 1

PED and business use

Answer 1

-using to increase total revenue-price elastic, lower vice versa
-looking at employment, shares and output

Question 2

PES and business use

Answer 2

-looking to make supply price elastic with factors:
-productive capacity
-spare capacity
-stocks
-subsititues
-time period

Question 3

XED and business use

Answer 3

-pricing decisions, if you sell two complements, lower price of one increase other, for substitutes, decrease price to beat competitiors
non pricing decisions- PASIFIC
-employment, stocks and output

Question 4

YED and business use

Answer 4

looking at booms and recessions
-pricing decision- decrease in a recession (necessity), increase in a boom (luxury and normal)
-employment, stocks and output

Question 5

limitations of price elasticity for business usage

Answer 5

-PED is not entirely accurate- surveys, competitions data, past data
-assume ceteris parabus
-PED changes along the demand curve