Suppose there was a $4 %$ decrease in the price of a good, and as a result, the expenditure on the good increased by $2 %$ . What can you say about the elasticity of demand?

Open in App

Solution

The expenditure increases with a decrease in the price of good. This is a contradictory change. Thus, the elasticity of demand is more than unitary elastic i.e., $(e_{d} > 1)$

Suggest Corrections

Similar questions

Q. When as a result of decrease in the price of a good, the total expenditure made on it decreases, we say that price elasticity of demand is _________.

Suppose the price elasticity of demand for a good is - 0.2. How will the expenditure on the good be affected if there is a $10 %$ increase in the price of the good?

Q. When the price of a good falls from

R s 10 t o R s 8

per unit, its demand rises from

20 u n i t s

24

units. What can you say about price elasticity of demand of the good through the 'expenditure approach' ?

Q. When as a result of an increase in the price of a good, the total expenditure made on it falls, we say that price elasticity of demand is ____________.

Suppose the price elasticity of demand for a good is - 0.2. If there is a $5 %$ increase in the price of the good, by what percentage will the demand for the good go down?

Join BYJU'S Learning Program

Suppose there was a 4% decrease in the price of a good, and as a result, the expenditure on the good increased by 2%. What can you say about the elasticity of demand?

The expenditure increases with a decrease in the price of good. This is a contradictory change. Thus, the elasticity of demand is more than unitary elastic i.e., (ed>1)

Suppose there was a $4 %$ decrease in the price of a good, and as a result, the expenditure on the good increased by $2 %$ . What can you say about the elasticity of demand?

The expenditure increases with a decrease in the price of good. This is a contradictory change. Thus, the elasticity of demand is more than unitary elastic i.e., $(e_{d} > 1)$