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Amna Qayyum Examine the factors which determine how businesses price their products. Various factors have to be taken into account when a firm sets a price for its products. First of all the firm has to work out the price elasticity of demand (PED) for it's product. If the PED is less than one (inelastic) then the firm should set a higher price in order to maximize revenue, however if the PED is greater than one (elastic) then the firm should set a low price in order to maximize revenue. The firm will also have to see which competition structure it is operating in. If is Perfect Competition then the firm are price-takers, and they can sell as much as they want to at the going rate, which is determined by the intersection between the Demand and Supply curves. If the firm is operating in a monopoly, then it is a...

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