When the total expenditure incurred by the consumers on a commodity due to a change is its price remains the same, then the elasticity of demand for that commodity will be:
  • a)
    Zero 
  • b)
    One 
  • c)
    More than one 
  • d)
    Less than one 
Correct answer is option 'B'. Can you explain this answer?

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Answers

Nitin Mishra
Oct 05, 2018
When the demand for a commodity is price elastic and the price of the commodity falls the in such a situation the total expenditure on the commodity rises . This is because of the fact that when the demand is price elastic the proportionate change in quantity demanded is greater than the proportionate change in price.

When the demand for a commodity is price elastic and the price of the commodity falls the in such a situation the total expenditure on the commodity rises . This is because of the fact that when the demand is price elastic the proportionate change in quantity demanded is greater than the proportionate change in price.
When the demand for a commodity is price elastic and the price of the commodity falls the in such a situation the total expenditure on the commodity rises . This is because of the fact that when the demand is price elastic the proportionate change in quantity demanded is greater than the proportionate change in price.