Demonstrate that the elasticity of demand is an increasing role in X.?

Question

Please help me out!

Answer 1

It's quite simple - since most firms seek to maximize profits and all markets are not ideally "purely competitive" - so all prefer to reach point there profit reaches maximum. None of firms will go too deep below or above unitary elasticity - only within specific cost ranges and to resist entry into market new participants attracted by high profits.

More details can be find here: http://en.wikipedia.org/wiki/Price_elast...