Answer to Question #67711 in Economics of Enterprise for avesh

Question

The price elasticity of the demand for laptops is 2.0; for USB drives it is 1.00; and for external hard drives it is 0.53.
If the firm is experiencing serious cash flow problems and you have to increase total revenue as soon as possible, then our pricing strategy will be built on assumption, that we should increase price for products with inelastic demand and decrease price for products with elastic demand. So, we should increase price for external hard drives and decrease price for laptops and USB drives to increase total revenue.

Answer 1

It is right pricing strategy for external hard drives and laptops, but decreasing of price USB drives will not increase revenue.