If your demand for a good is _______, then a 1 per cent fall in its price will lead you to _______ your expenditure on the good.
A) unit elastic; increase
B) inelastic; increase
C) inelastic; decrease
D) elastic; decrease

Question

Quizplus · Accepted Answer

If demand is inelastic, a decrease in price leads to a smaller percentage increase in quantity demanded, thus overall expenditure on the good decreases.

If Your Demand for a Good Is _______, Then a 1