If the price elasticity of demand for orange juice is 0.8, then a reduction in the price of orange juice will cause buyers to buy
A)fewer bottles of orange juice, and their total spending on orange juice will decrease.
B)fewer bottles of orange juice, but their total spending on orange juice will increase.
C)more bottles of orange juice, and their total spending on orange juice will increase.
D)more bottles of orange juice, but their total spending on orange juice will decrease.

Question

Quizplus · Accepted Answer

Since the price elasticity of demand is less than 1 (inelastic), a reduction in price will lead to a proportionally smaller increase in quantity demanded, causing total revenue (or spending) to decrease.

If the Price Elasticity of Demand for Orange Juice Is