Explain Why It Is So Important for a Business to Understand

question 73

Essay

Explain why it is so important for a business to understand the concept of price elasticity and be able to measure this for its products.

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Definitions:

Net Income

The total earnings or profit a company generates, calculated as revenue minus expenses, taxes, and deductions.

Total Assets

The sum of all resources owned by a company that have economic value and can be converted into cash, including property, equipment, and cash itself.

Price-Earnings Ratio

A valuation metric comparing a company's current share price to its per-share earnings, indicating investor expectations of growth.

Market Price

The existing cost for purchasing or selling an asset or service.