Answer to Question #107783 in Microeconomics for Safrin Qurishi

Question #107783
cadbury is a british multinational company which produces not only chocolate bars but also wide range of other snack products. it is planning to increase the price of all products by 10%
i) price elasticity of demand is the most important factor for cadbury to consider when deciding whether to increase prices. Do you agree with this statement? Explain your answer.
Expert's answer

Yes. Price elasticity is a crucial aspect Cadbury must take into consideration as it plans to increase the price of its products. Price elasticity is the extent to which the desire of a product changes with changes in price. When the price of goods increases, their demand reduces. A 10% increase is a huge difference. The moment the company prices are affected by an increase, the demand will will fall rapidly.

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Daniella sesay
02.06.20, 23:30


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