(Answered) measures how much consumers respond to changes in price or incomemeasures how much consumers…

➤ When should firms use elasticity to guide pricing and revenue decisions?
Firms use elasticity to predict how price changes affect revenue and profit. If demand is elastic, lowering price tends to raise total revenue. If demand is inelastic, raising price usually increases revenue. Firms also weigh costs, competition, and the time horizon because elasticity can change between short run and long run.