You have just been hired as a business consultant to determine what pricing policy would be appropriate to increase the total revenue of a bakery.The first step you would take would be to
A)increase the price of every loaf of bread in the store.
B)look for ways to cut costs and increase profit for the bakery.
C)determine the price elasticity of demand for the bakery's products.
D)determine the price elasticity of supply for the bakery's products.

Question

Quizplus · Accepted Answer

Before making any changes to the bakery's pricing policy, it is important to understand how responsive customers will be to changes in price. This can be determined by calculating the price elasticity of demand, which measures the percentage change in quantity demanded in response to a change in price. This information will allow the consultant to make informed decisions about pricing that will benefit the bakery's bottom line without driving away customers. Option A may lead to a decrease in demand for the bakery's products, which could ultimately decrease total revenue. Option B may be helpful in increasing profitability, but it does not address the issue of pricing policy. Option D may provide some useful information, but price elasticity of supply is not as critical to determining pricing policy as price elasticity of demand.

You Have Just Been Hired as a Business Consultant to Determine