A company raises the price of its product from $10 to $15 and observes that its total revenue increases from $1,000 to $1,200. How would you classify the elasticity of demand for this product?

To understand the elasticity of demand for the product, we need to look at how the change in price affects total revenue. When the company raised the price from $10 to $15, total revenue increased from $1,000 to $1,200. This means that even though the price went up, the quantity sold did not decrease enough to offset the higher price, leading to more money earned overall. This situation suggests that the demand for the product is inelastic, meaning consumers are not very sensitive to price changes and continue to buy it even at a higher price. For example, if a product is a necessity, like medicine, people will keep buying it even if the price rises, demonstrating inelastic demand.