Question

Total expenditure for a good increases as the price of a good increases, if the price elasticity of demand is ________.

1) perfectly elastic
2) unitary elastic/unit elastic
3) inelastic
4) elastic

Answer 1

When the price elasticity of demand is inelastic, an increase in price leads to a smaller decrease in quantity demanded and an increase in total expenditure for a good.

Step-by-step explanation:

The question is asking about the relationship between total expenditure and price elasticity of demand. When the price elasticity of demand is inelastic, it means that the quantity demanded does not change significantly in response to a change in price. In this case, an increase in price leads to a smaller decrease in quantity demanded, resulting in an increase in total expenditure for a good.