If the demand for a good is inelastic, an increase in its price will

QUESTION
Q10) 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:

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Correct

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Solution:
The relationship between price and total expenditure of consumers of a good with inelastic demand.
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 decrease.
So, the answer is (c) Decrease. This is because when the price of a good increases, decreases in the quantity demanded by a smaller percentage.
Therefore, total expenditure (price x quantity demanded) increases when demand is elastic and decreases when demand is inelastic .
Module answer is (b) Increase.
Correct option is (c)

Chapter 1 Unit II questions