Examine the usefulness of a knowledge of price elasticity

of demand to firms and governments. (15 marks)

1. Good response
2. Once you use the diag to explain the impact on TR of ss changes for PED>1 and PED<1 ,
develop how this information can be used by the producer to devise pricing strategy to maximise TR.
3. Evaluation can be strengthened. Is it easy for govt and producers to calculate PED?
Is PED constant over time?