Why a firm would never increase the price in the elastic region of its demand curve if it could avoid doing so

Question

Please explain why a firm would never increase the price in the elastic region of its demand curve if it could avoid
doing so

Answer 1

The elastic region of the demand curve refers to prices which create the greatest shift in demand by tinkering with the price. Whereas the inelastic region is the point where people are more likely to pay no matter what is being charged.

Suppose if a beer company can choose to price its beer at $3 a can (and get 10 million customers), $4 a car (and get 5 million customers) or $6 a can (and get 4 million customers). It not make sense to raise beer from $3 to $4 as you would loose half your customers. The difference from $4 to $6 however represents a 33% increase in costs, but only a 20% loss of customers - this is the inelastic part of the demand curve.