Suppose an increase in the price of hair dryers leads to an increase in total expenditures on the hair dryers. Which of the following is true for this price change?
A) Hair dryers are an inferior good.
B) The demand for hair dryers is perfectly elastic.
C) The demand for hair dryers is inelastic.
D) The demand for hair dryers is elastic.

Question

Quizplus · Accepted Answer

When the price increase leads to an increase in total expenditures, it indicates that the demand is inelastic. This is because the percentage change in quantity demanded is less than the percentage change in price, resulting in higher total revenue.

Suppose an Increase in the Price of Hair Dryers Leads