Economics Homework Help

1.You are introduced to the shutdown price, using elasticity to determine the effects of price changes, and cost-based pricing. Discuss the importance of considering elasticity in pricing decisions and the danger of relying solely on costs.

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2. Relying solely on costs, and setting prices too low may be dangerous due to a decrease in business revenue. The business may make less than what they could have. This is where elasticity comes into play. Elasticity is the responsiveness of one variable to a change in another. If quantity demanded changes a lot when price changes a little, the product or goods has an elastic demand. (CSU,2021)