If the price of gasoline fell from $2.95 to $2.85 per gallon, your expenditure on gasoline would increase if your price elasticity of demand for gasoline equals
A) 1.1.
B) 1.0.
C) 0.9.
D) Total revenue would increase at all of the above elasticities.

Question

Quizplus · Accepted Answer

If the price elasticity of demand is greater than 1 (elastic), a decrease in price leads to a proportionally larger increase in quantity demanded, thus increasing total expenditure.

If the Price of Gasoline Fell from $2