If the price of gasoline rose from $2.85 to $2.95 per gallon, your expenditure on gasoline would increase if your price elasticity of demand for gasoline equals
A) 1.25.
B) 1.00.
C) 0.75.
D) Total revenue would increase at all of the above elasticities.

Question

Quizplus · Accepted Answer

If the price elasticity of demand is less than 1 (inelastic), like 0.75, an increase in price leads to an increase in total expenditure because the percentage change in quantity demanded is less than the percentage change in price.

If the Price of Gasoline Rose from $2