When the price of commodity B rises by 10%, the total revenue received by firms that sell
commodity B rises by 5%. The demand for commodity B is therefore...
a) perfectly elastic.
b) unitary elastic
c) inelastic
d) elastic
c) inelastic
This is because an increase in the price of commodity B by 10% causes an increase in its demand hence the increase in revenue by a smaller percentage 5% .
This means the change in the price had a little impact on the demand of the commodity hence the demand is inelastic.
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