Suppose that the price elasticity of demand for grapefruit is -2.8.The introduction of a new variety that is cheaper to grow should cause consumer expenditures for grapefruit to:
A) rise.
B) fall.
C) remain unchanged.
D) it is not possible to answer with the information given.

Question

Quizplus · Accepted Answer

Since the price elasticity of demand for grapefruit is -2.8, it means demand is elastic. A decrease in price due to the introduction of a cheaper variety will lead to a proportionally larger increase in quantity demanded, thus increasing total consumer expenditures.

Suppose That the Price Elasticity of Demand for Grapefruit Is