One problem in relying on price elasticity and demand curves when setting prices is
A) the way a product or service is marketed can have a profound impact on price elasticity.
B) the underlying ideas of the demand curve and elasticity are less relevant in the modern economy.
C) only economists can properly analyze demand curves and set prices using this tool.
D) competitors can construct the same demand curves, so there is no advantage in using them.
E) marketing split from economics over the ideas of demand and elasticity.

Question

Quizplus · Accepted Answer

The way a product or service is marketed can have a profound impact on price elasticity. For example, a luxury brand may be able to charge a higher price due to brand image and perception, even if a similar product is available at a lower price. Similarly, promotional activities like discounts and sales can also impact price elasticity. Therefore, relying solely on price elasticity and demand curves may not lead to accurate pricing decisions.

One Problem in Relying on Price Elasticity and Demand Curves