Explain how the profit-maximizing price is calculated. Why is the profit-maximizing price extremely difficult to calculate for an actual product?© BrainMass Inc. brainmass.com October 10, 2019, 4:44 am ad1c9bdddf
The exact method to calculate a profit maximizing price is to determine the elasticity of a product. Elasticity refers to how changes in price affect demand. The more elastic the product is, the greater the changes in demand that are in direct relation to price. Basically, when prices go up, demand drops. We do this by calculating 1+the change in percentage of the quantity sold of the product divided by 1+ the ...
The solution explains how the profit-maximizing price is calculated and why the profit-maximizing price extremely difficult to calculate for an actual product.