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

Question

Quizplus · Accepted Answer

When the price of perfume falls and total expenditure increases, it indicates that the quantity demanded increases by a proportionally larger amount than the price decrease, which means the demand is elastic (price elasticity of demand is greater than one).

If the Total Expenditure on Perfume Increases When the Price