Question

Explain what will happen to the total revenue of the suppliers of food if the price of food: increases and decrease

Answer 1

Food is an inelastic good(i) increase in priceIf the price for an inelastic good is increased, the demand for that good does not reduce, resulting in more overall revenue due to the higher price and no change in demand.
(ii) Decrease in priceIf the price for an inelastic good falls, the demand for that good does not increase, resulting in less overall revenue due to the lower price and no change in demand.