Which among the following statement is INCORRECT? Show A. On a linear demand curve, all the five forms of elasticity can be depicted B. If two demand curves are linear and intersecting each other, then, coefficient of elasticity would be same on different demand curves at the point of intersection. C. If two demand curves are linear and parallel to each other, then, at a particular price, the coefficient of elasticity would be different on different demand curves. D. The price elasticity of demand is expressed in terms of relaive not absolute changes in Price and Quantity demanded. What happens to total expenditure when price decreases?The reduction in total expenditure induced by the lower price is overwhelmed by the increase in total expenditure induced by the larger quantity, thus total expenditure increases with a price decrease. For inelastic demand, the percentage change in price is greater than the percentage change in quantity.
What happens to total expenditure on a commodity when its price falls and its demand is price elastic?When the demand for a commodity is price elastic and the price of the commodity falls the in such a situation the total expenditure on the commodity rises.
When total expenditure increases with a rise in price it would be?Increase in total expenditure, will two effects on price, If price rises then demand is inelastic and if price fall then demand is elastic. In the present case when total expenditure increases then demand will inelastic with rise in price because there is a direct relationship between the price and total expenditure.
What causes total expenditure to increase?An increase in price causes total expenditure to rise and a decrease in price causes total expenditure to fall. For unit elastic demand (E =1) price changes do not cause any change in total expenditure.
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When as a result of decrease in the price of good the total expenditure made on it decrease we say that price elasticity of demand is?
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