Suppose a firm wants to launch a new product on the market.how can the knowledge of the different types of elasticities might be helpful to him.
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Answer:
It will help the firm set the price for the product. If there is high cross-elasticity with competing products, they will have to set the price fairly low because the other products are considered a good substitute. On the other hand, if there is little cross-elasticity, they can set the price higher because people will not accept a lower priced product as a substitute.
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