Price changes are useful for matching the level of demand to the capacity of a facility.

Question

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When demand for a product or service exceeds the capacity of a facility, raising prices can help manage the flow of customers by reducing demand. Conversely, lowering prices can stimulate demand when capacity exceeds current demand. This allows businesses to better adjust their production or staffing levels to match demand, ultimately improving efficiency and profitability.

Price Changes Are Useful for Matching the Level of Demand