Answer to Question #283346 in Management for Vruu

Question

Suppose you are a monopolist and find that the demand elasticity of your product is different in two markets. What would be your pricing strategy?

Answer 1

The difference in the price elasticity of demand for the product means that the factors affecting the demand are distinctive. In this regard, I will ensure that one market has a specified price rate for the product that differs with the other market. The rationale will be based on the reasons for the product's demand. For instance, a food product can attract consumers due to its relativity to the local foods that are staple while another market could be purchasing it because it is a great substitute to a product that is liked a lot in the region. The pricing strategy will, therefore, depend on the factors that augment the demand of the product in the two independent regions.