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Expenditure and Elasticity

If price elas...

Question

If price elasticity of demand is zero, it means expenditure on the commodity does not change with change in price of the commodity.

A

True

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B

False

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Solution

The correct option is B
False

False. When Ed = 0, demand remains constant, no matter what the price is. Implying that total expenditure may increase/decrease, but not the quantity demanded.

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Q. The demand for a commodity does not change with increase in its price from Rs. 5 to Rs. 10. What is its elasticity of demand ?

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Q. If the change in the quantity demanded is proportionate to the change in price, the elasticity of demand of commodity will be _______ .

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Elasticity of demand refers to change in quantity consequent upon change in price of the commodity.

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