The price elasticity of demand for fresh zucchini has been estimated to be 2.25. A new irrigation system yields a 25% increase in the nation's crop of fresh zucchini. Which of the following best describes how this will affect total expenditures on zucchini, all other things equal?
A) Total expenditures will remain unchanged.
B) Total expenditures will fall.
C) Total expenditures will rise.
D) The information is insufficient to answer the question.

Question

Quizplus · Accepted Answer

The price elasticity of demand is greater than 1, so a decrease in price will lead to an increase in total expenditures.

The Price Elasticity of Demand for Fresh Zucchini Has Been