question archive Is the Price Waterhouse Coopers demand curve relatively elastic or relatively inelastic? Explain how you arrive to your conclusion

Is the Price Waterhouse Coopers demand curve relatively elastic or relatively inelastic? Explain how you arrive to your conclusion

Subject:EconomicsPrice:2.88 Bought3

Is the Price Waterhouse Coopers demand curve relatively elastic or relatively inelastic? Explain how you arrive to your conclusion.

pur-new-sol

Purchase A New Answer

Custom new solution created by our subject matter experts

GET A QUOTE

Answer Preview

PricewaterhouseCoopers a professional services firm that specializes in accounting service for businesses. Accounting service must be purchased by businesses to remain in compliance with the law. In this respect the market demand for their service is inelastic. However, PricewaterhouseCoopers operates in an oligopolistic environment and faces competition from a few other large firms. If one firm lowers its price the others would likely follow, however the amount of services their customers require would not likely change due to a price change. Firms who purchase accounting services would not want to buy more services if PricewaterhouseCoopers lowered their prices. However, if PricewaterhouseCoopers raised their prices, some customers would switch to a cheaper competitor. PricewaterhouseCoopers likely faces two demand elasticities, an inelastic demand if they lower their prices and an elastic demand if they raise their prices. A technical analysis might find that their current prices are what is known as unitary elastic, but the market demand for accounting services is relatively inelastic.