Question

What is the situation implies in the case where the demand is greater than unitary elastic when percentage change in quantity demanded in response to change in price of the commodity?

• A. Expenditure on commodity decreases when price increases
• B. Expenditure on commodity remains constant when price increases
• C. Expenditure on commodity decreases when price decreases
• D. Expenditure on commodity is greater when price increases

Answer 1

The correct option is A

Expenditure on commodity decreases when price increases

The demand is greater than unitary elastic when percentage change in quantity demanded in response to change in price of the commodity implies that the total expenditure on the commodity decreases when price increases.