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what is the effect on prices when company has to absorb higher costs?

what is the effect on prices when company has to absorb higher costs?

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When company faces the higher cost, then it wants to pass it on to the final price of goods and services. It means that, price will increase due to the impact of higher cost of production & operations. Though, rise in price, depends upon the elasticity of demand for that goods. If the demand is relatively inelastic, then major portion of the rising cost, will be passed on to the price and price will rise significantly. If demand is relatively elastic, then some art of the higher cost, will be absorbed by the company and remaining portion of the cost, will be passed to the price and price will rise moderately.

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