In order to maximize his profit, a businessman who faces a very elastic demand for his product is advised to?
Answer Details
A businessman who faces a very elastic demand for his product is advised to slightly reduce the price of his products in order to maximize his profit. This is because when the demand for a product is very elastic, a small change in price will result in a significant change in quantity demanded.
For example, if the price of a product is reduced, the quantity demanded will increase significantly, resulting in a higher total revenue for the business. Conversely, if the price is increased, the quantity demanded will decrease significantly, resulting in a lower total revenue.
Therefore, in order to maximize profit, a businessman facing a very elastic demand should aim to find the optimal price point that will result in the highest total revenue. This can be achieved by reducing the price of the product slightly, but not too much that it results in a loss for the business.
Overall, in order to maximize profit when facing a very elastic demand for his product, a businessman is advised to slightly reduce the price of his products.