Figure 6-4
-In Figure 6-4, total expenditure ____ as price falls from P = 12 to P = 10.
A)falls
B)remains constant
C)rises
D)rises by more than $12

Question

Figure 6-4 
-In Figure 6-4, total expenditure ____ as price falls from P = 12 to P = 10.
A)falls 
B)remains constant 
C)rises 
D)rises by more than $12

Quizplus · Accepted Answer

Total expenditure on a product is the product of its price and the quantity sold. As price falls, if the demand is elastic, the quantity demanded increases by a proportion greater than the decrease in price, leading to an increase in total expenditure.

Figure 6-4 -In Figure 6-4, Total Expenditure ____ as Price Falls from Price