ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -If demand is inelastic, a decrease in price will cause total revenue to fall. If demand is elastic, an increase in price will cause total revenue to fall. If demand is elastic, a decrease in price will cause total revenue to rise.

Detailed explanation-2: -In case of perfectly inelastic demand the change in price will have no effect on the quantity demanded.

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: a reduction in price will reduce total revenue, and an increase in price will increase it.

Detailed explanation-4: -Inelastic demand means that when the price of a good or service goes up, consumers’ buying habits stay about the same, and when the price goes down, consumers’ buying habits also remain unchanged.