micro economics

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ankit singh (Querist)
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28 May 2010 if the demand of the good is inelastic in its price will cause the total expenditure of the consumers of the good to increase or decrease? why

CMA.Palani Arumugam

CMA.Palani Arumugam (Expert)
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28 May 2010 Since the demand is inelastic, the total expenditure will depend upon the price of the goods.

For eg. If the demand is 100 (which is inelastic) and the price is Rs.10 , the total expenditure is Rs.1000/-

Now, if the price increases to Rs.11, then the total expenditure will be Rs.1100/- and if the price decrease to Rs.9 then the total expenditure will be Rs.900.

Hope u understood.