Economics

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Prakash Tripathi (Querist)
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16 August 2016 How can we proof that if price of a commodity rises and total revenue also rises and vice versa then demand for the commodity will be relatively inelastic

Amol S Joglekar

Amol S Joglekar (Expert)
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17 August 2016 Demand, Supply and Price.
You can prove the same with the numerical example....
P1 = 10......S1= 100,000................therefore revenue =1,000,000
P2 = 12.....S2 = 83,333........... ......therefore revenue = 1,000,000
P3 = 9........S3 = 111,111................therefore revenue = 1,000,000
In this example the PRICE elasticity of DEMAND is perfectly inelastic.
If PED (Price Elasticity of Demand) is less than 1......it is inelastic
If PED is zero....it is perfect inelastic
If PED is greater than 1 ........it is elastic
If PED is infinite........ it is perfect elastic

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