Final answer:
The price elasticity of demand helps managers determine pricing decisions and maximize revenue in business.
Step-by-step explanation:
The price elasticity of demand is important in business because it helps a manager determine the responsiveness of quantity demanded to changes in price. This information is crucial for making pricing decisions and maximizing revenue. When the price elasticity of demand is elastic (>1), a decrease in price will lead to a proportionally larger increase in quantity demanded, so the manager should consider lowering the price. On the other hand, when the price elasticity of demand is inelastic (<1), an increase in price will lead to a proportionally smaller decrease in quantity demanded, so the manager should consider increasing the price. When the price elasticity of demand is 1 (unit elastic), total revenue is maximized, and the manager should maintain the current price level.