a-company-notices-that-the-cross-price-elasticity-between-its-product-and-a-comp

Question

A company notices that the cross-price elasticity between its product and a competitor's product is 1.2. What strategic decision might the company consider based on this information?

Accepted Answer

Lowering prices to gain market share from the competitor.

Answer

Maintaining current prices as the products are complements.

Answer

Discontinuing the product as it is unrelated to the competitor's product.

Answer

Raising prices to increase revenue.