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The Demand of a Commodity, When Measured Through the Expenditure Approach, is Inelastic. a Fall in Its Price Will Result in : (Choose the Correct Alternative) - Economics

The demand of a commodity, when measured through the expenditure approach, is inelastic. A fall in its price will result in : (choose the correct alternative)

(a) No change in expenditure on it.

(b) Increase in expenditure on it.

(c) Decrease in expenditure on it.

(d) Anyone of the above.

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Solution

Decrease in expenditure on it.

Demand for a good is termed inelastic through the expenditure approach when a fall in its price will result in the decrease in expenditure on it. This is because the expenditure is positively related with a price.

Concept: Demand
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