BACHELOR OF BUSINESS ADMINISTRATION

Detailed explanation-1: -Price inelasticity offers firms greater flexibility with prices as the change in demand remains essentially the same whether prices increase or decrease. If the price goes up or down, you can expect consumers’ buying habits to stay mostly unchanged.

Detailed explanation-2: -Inelastic Demand Note that a change in price results in only a small change in quantity demanded. In other words, the quantity demanded is not very responsive to changes in price. Examples of this are necessities like food and fuel.

Detailed explanation-3: -a) If demand is price inelastic, then increasing price will decrease revenue.

Detailed explanation-4: -An inelastic demand is one in which the change in quantity demanded due to a change in price is small.

Detailed explanation-5: -However, if demand is inelastic at the original quantity level, then should the company raise its prices, the percentage increase in price will result in a smaller percentage decrease in the quantity sold-and total revenue will rise.