Question

True or False with Reason:

In case of perfectly inelastic demand, expenditure on the commodity does not change with change in its price.

Answer 1

This statement is false.

Explanation:

• In perfectly inelastic demand, quantity demanded remains constant when price changes.
• Total expenditure = price × quantity, so if price changes while quantity is fixed, total expenditure changes.
• Hence, expenditure does change with a change in price.