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 No matter what percentage, if a decrease in price causes rise in total expenditure, the good has elastic demand (ED > 1)
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Yes !! sd is right , if expenditure descreases because of descrease in price then the demand will be elastic.
When 8% decrease in price of commodity causes 2% increase in expenditure of a commodity the elasticity of demand is *?1 Answer. Elasticity of demand must be greater than unity (implying a situation of elastic demand) when expenditure on the commodity responds inversely to any change in price of the commodity.
When demand for a commodity is perfectly inelastic an increase in price by 2% leads to increase in quantity demanded by Dash?d. 0% Since demand in inelastic, the change in price by 2% will not lead to change in demand.
When a decrease rise in price leads to a rise decreases in expenditure of a commodity then demand of that commodity is?Elasticity is more than One (Ed > 1):
When demand is elastic, a fall in the price of a commodity results in increase in total expenditure on it. On the other hand, when price increases, total expenditure decreases.
When total expenditure increases in response to decrease in the price of the commodity the elasticity of demand is?Implying that total expenditure increases in response to decrease in price of the commodity. Hence, elasticity of demand is greater than unity (or Ed > 1).
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When 8% decrease in price of a commodity causes 2% increase in expenditure of a commodity the elasticity of demand is?
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