Question

True or False with Reason:

Using outlay method, we can never have unitary elastic demand.

Answer 1

This statement is false.

Explanation:

• Under the total outlay method, if total expenditure remains unchanged when price changes, demand is unitary elastic.
• Thus, the outlay method can identify unitary elastic demand.
• Therefore, it is incorrect to say unitary elastic demand can never be found using this method.