ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -When the price elasticity of demand for a good is perfectly inelastic, changes in the price do not affect the quantity demanded the good; raising prices will always cause total revenue to increase.

Detailed explanation-2: -a) If demand is price inelastic, then increasing price will decrease revenue.

Detailed explanation-3: -When demand is price inelastic, a given percentage change in price results in a smaller percentage change in quantity demanded. That implies that total revenue will move in the direction of the price change: an increase in price will increase total revenue, and a reduction in price will reduce it.

Detailed explanation-4: -An increase in price result in an increase in total revenue(total expenditure), indicates direct relation so demand will be inelastic (E<1).

Detailed explanation-5: -In case of inelastic Demand, when the price is increased, it will cause the total expenditure of the consumer to increase because total expenditure = quantity demanded × price. The demand will not change but the change in price cause consumer’s total expenditure to increase.