If a consumer's demand curve as constant own-price elasticity of -2, the consumer's spending will fall as price increases.

Question

Quizplus · Accepted Answer

A constant own-price elasticity of -2 means that for every 1% increase in the price of the good, the quantity demanded will decrease by 2%. As a result, if the price of the good increases, the consumer will reduce their spending on the good, leading to a decrease in overall spending. Therefore, the statement is true.

If a Consumer's Demand Curve as Constant Own-Price Elasticity of -2