Carter has budgeted $40 per month for candy bars.No matter how the price of candy bars changes,he spends exactly $40 per month.Carter's price elasticity of demand for candy bars must
A)Equal zero.
B)Be unitary.
C)Be very inelastic since the amount he spends is not responsive to a price change.

Question

Quizplus · Accepted Answer

Carter's price elasticity of demand is unitary because he adjusts the quantity he buys to ensure his total expenditure remains constant at $40, regardless of price changes.

Carter Has Budgeted $40 Per Month for Candy Bars