Given the population of the United States of people suffering from the hearing problem as approximately 30 million, with only 7 million able to afford a hearing aid, the price of the commodity becomes an important factor in determining whether an individual would use a hearing aid. As the price of a hearing aid range from $ 2000 to $4000, the proportion of the affected population that still manages to acquire a hearing aid is close to a quarter of the entire population. This is a clear indication that the hearing aid is true, price elastic. With the price elasticity set to measure the responsiveness of the quantity of a product to the changes in its price, if the firm decides to increase the price of the hearing aids, then this would be followed by a drastic increase in the number of hearing aids demanded in the American market.
Assuming the aspects of stigma and other factors affect every person uniformly across the country, the price elasticity of demand for hearing aid should definitely imply a significant change in the numbers of hearing aids demanded. Because these items are used under the doctors’ prescription, nobody would really wish to put on a hearing aid without suffering hearing impairment. Therefore, a decrease in hearing aid prices would be followed by an inevitable increase in the number of hearing aids demanded in the market. In this analysis, Price reduction leads to increased revenue in two ways; first, the ability to afford hearing aids would fall within the means of many people who would not afford them before. Thus, the firm is predisposed to generate more sales within a short span of time, thus maximizing revenue using the model TR=TQ X unit Price.