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Question
What would be the price elasticity of demand when total expenditure on a commodity changes in the opposite direction to change in its price?
Very Short Answer
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Solution
When total expenditure changes in the opposite direction to the change in price, the price elasticity of demand is greater than one (ep > 1). This indicates elastic demand, where consumers are highly responsive to price changes.
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Chapter 22: Model Short Answer Questions - MODEL SHORT ANSWER QUESTIONS [Page 457]
