If the price of apples increases, total expenditures on apples will decline if
A) the demand for apples is inelastic.
B) the demand for apples is elastic.
C) the quantity of apples purchased is unresponsive to changes in price.
D) there are few good substitutes for apples.

Question

Quizplus · Accepted Answer

If the demand for apples is elastic, a price increase will result in a proportionately larger decrease in quantity demanded, leading to a decrease in total expenditures. In contrast, if the demand for apples is inelastic, a price increase will result in a proportionately smaller decrease in quantity demanded, and expenditures will increase despite the price increase. Therefore, the best choice is B.

If the Price of Apples Increases, Total Expenditures on Apples