Answer to Question #76426 in Macroeconomics for sheen

Question

Explain the term price elasticity of demand? what factors influence market demand for products? If the price elasticity is ¬¬-3 and RM 100 is the Marginal Cost of product X, what should be the optimal sale price?

Answer 1

Price elasticity of demand (PED or Ed) is a measure used in economics to show the responsiveness, or elasticity, of the quantity demanded of a good or service to a change in its price when nothing but the price changes.
Factors that influence market demand for products are:
1. Normal Goods
2. Change in Preferences
3. Complimentary Goods
4. Substitutes
5. Market Size
6. Price Expectations
If the price elasticity is Ed = -3 and MC = RM 100, then the optimal sale price is P = MR = MC = RM 100.
Source:
1) https://en.wikipedia.org/wiki/Price_elasticity_of_demand
2) https://www.intelligenteconomist.com/factors-affecting-demand/