Every seller prefers a situation where it can increase the p

Every seller prefers a situation where it can increase the price of the product it sells without suffering a more than proportionate loss in revenue. To achieve this, the seller could make the demand for its product more price inelastic. Suggest strategies the seller can adopt to achieve this.

Solution

Elasticity is dependent on a number of factors, including:

One way is to simply own a monopoly on a market or product category. In this case, consumers don’t feel they have much of a choice and will be forced to pay much higher prices.

Another is to develop highly-differentiated brands and products. Grape Computers, for example, commands almost twice the price of competing models because consumers perceive its brand and products as unique, with benefits not offered by competing, lower-priced models.

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