Q87
If the demand for a commodity is inelastic, an increase in its pice will cause the total expenditure of the consumers of the commodity to
A.
Remain the same
B.
Increase
AnswerC.
Decrease
D.
Any of the above
Answer: Option B
Solution
Answer: Option B
Solution:
If the demand for a commodity is inelastic, an increase in its pice will cause the total expenditure of the consumers of the commodity to Increase. When demand is inelastic, a fall in the price of a commodity leads to fall in total expenditure on it. On the other hand, when price increases, total expenditure also increases.