If the total expenditure on photocopiers increases when the price of photocopiers rises, the price elasticity of demand is
A) not determinable from the information given.
B) less than one (demand is inelastic).
C) greater than one (demand is elastic).
D) exactly zero.
E) equal to one (demand is unit elastic).

Question

Quizplus · Accepted Answer

When the total expenditure on a good increases as the price of the good rises, it implies that the demand for the good is inelastic. Inelastic demand means that the percentage change in quantity demanded is less than the percentage change in price. Therefore, the price elasticity of demand is less than one.

If the Total Expenditure on Photocopiers Increases When the Price