Answer to Question #205872 in Microeconomics for Eddie

Question

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

Answer 1

Inelastic

Inelastic demand comes where the the price increases in a small percentage which will similarly change the quantity demanded due to the increament. However the small increament will not discourage consumers much, but it will increase the revenue within respective firm.