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Question
When demand is inelastic, an increase in the price of a commodity would cause the total expenditure of the consumers to ______________.
When demand is inelastic, an increase in the price of a commodity would cause the total expenditure of the consumers to ______________.
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Solution
The correct option is A increase
When demand is inelastic, an increase in the price of a commodity would cause the total expenditure of the consumers to increase. As demand is inelastic, demand does not respond to the change in price, now when the price rises the expenditure also increases since we know, expenditure is the product of price and quantity demanded.
When demand is inelastic, an increase in the price of a commodity would cause the total expenditure of the consumers to increase. As demand is inelastic, demand does not respond to the change in price, now when the price rises the expenditure also increases since we know, expenditure is the product of price and quantity demanded.
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