Price elasticity of demand
We have discussed how firms with market power impose different prices on products consumed by their customers, based on different levels of elasticity. You must reflection on those industries that follow this strategy successfully. Choose a market or industry and answer:
1) How do companies in the selected industry manage to charge customers different prices based on their different levels of elasticity?
When answering you should:
- Be sure to include a description of the market you are exhibiting.
- Define the concept of “price elasticity” of demand.
- Explain the relationship between price and demand. Defend your point of view by justifying with an example your answer.