Answer to Question #66836 in Microeconomics for Emily

Question

discuss why entrepreneur might want to change the price elasticity of demand for their products and consider the extent which is achievable.

explain using elasticity of demand why a train company might introduce a policy of raising fairs at busy travel time and lowering fairs at less busy travel times

Answer 1

Entrepreneur might want to decrease the price elasticity of demand for their products, because the more inelastic is demand, the higher revenue can be gained according to the increase in price charged, the extent which is achievable depends on different factors.
A train company might introduce a policy of raising fairs at busy travel time, because the demand is inelastic in this case and the increase in price will cause the increase in total revenue, and it might introduce a policy of lowering fairs at less busy travel times, because the demand is elastic in this case and the decrease in price will cause the increase in total revenue.