If the demand for a good is inelastic, an increase in its price will cause the total expenditure of the consumers of the good to:
  • a)
    Increase
  • b)
    Decrease
  • c)
    Remain the same
  • d)
    Become zero
Correct answer is option 'A'. Can you explain this answer?

Commerce Question

By Lavi Chauhan · Jun 15, 2018 ·Commerce
3 Answers
Swarnim Sharma answered Jun 16, 2018
Since,the demand of the good is inelastic.So,even if the price will increase the consumer will not decrease the consumption of that good.They will continue to purchase that goods... Due to this the production will go on.And so,the expenditure will increase.

Priyanka Ravichandran answered Jun 16, 2018
When demand increase simutanously total expenditure of the consumers of good is also increase

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