Question

True or False with Reason:

If a commodity has unitary elastic demand, then according to total expenditure method, spending by a consumer will not change with change in price.

Answer 1

This statement is true.

Explanation:

• Under unitary elastic demand, percentage change in quantity demanded is equal to percentage change in price.
• As a result, total expenditure = price × quantity remains constant.
• Therefore, consumer spending does not change when price changes.