If the total expenditure on perfume increases when the price of perfume falls,the price elasticity of demand is
A)greater than one (demand is elastic).
B)less than one (demand is inelastic).
C)unity (demand is unit elastic).
D)exactly zero.
E)not determinable from the information given.

Question

Quizplus · Accepted Answer

When the total expenditure on a product increases as the price of that product falls, then demand is said to be elastic. This is because consumers are more responsive to the price change and therefore buy more of the product, leading to a larger increase in quantity demanded than the decrease in price. Price elasticity of demand is greater than one in this case.

If the Total Expenditure on Perfume Increases When the Price