Law of Demand Law of Supply and Price elasticity of demand and Supply

That means that the higher the prices, the less the quantity the customers will be willing to buy of the products, holding all the other factors constant. Therefore, since revenue is a product of quantity and prices, the study of the demand in the market is essential in increasing the sales and revenue for the company (Gupta 12). The company must learn where to set the prices for maximum sales. In relation to the law of demand, the firm must also understand the type of goods they are dealing with. For example, they are products that do not go by the law of demand. The price elasticity of supply on the other hand measures how the quantity supplied responds to changes in the market prices.