If an increase in the price of a commodity leads to increase in total revenue, then it means that the demand for this commodity is?

Answer Details

If an increase in the price of a commodity leads to an increase in total revenue, then the demand for this commodity is either inelastic or relatively inelastic. This is because inelastic demand refers to a situation where a change in price causes a relatively smaller change in quantity demanded. Therefore, when the price of such a commodity is increased, the increase in total revenue will be significant because the quantity demanded will not change significantly. On the other hand, if the demand for a commodity is elastic, it means that a change in price causes a relatively larger change in quantity demanded. Hence, an increase in the price of such a commodity will lead to a decrease in the quantity demanded, leading to a decrease in total revenue. Therefore, if an increase in price results in an increase in total revenue, the demand for the commodity is inelastic or relatively inelastic.