The Mear Corporation finds that its total spending on machine parts increases after the price of machine parts falls,other things being equal.Which of the following is true about the Mear Corporation's demand for machine parts with the price change?
A) It is unit elastic.
B) It is price elastic.
C) It is price inelastic.
D) It is perfectly inelastic.

Question

Quizplus · Accepted Answer

If the Mear Corporation is increasing their spending on machine parts after a price decrease, it indicates that the demand for machine parts is price elastic - meaning that a change in price has a significant impact on the quantity demanded.

The Mear Corporation Finds That Its Total Spending on Machine