Indy has a price elasticity of demand for beer of 1.00.Suppose the price of each beer is increased by 10 percent.What will happen to the total amount Indy spends on beer?
A) It will not change.
B) It will decrease 10 percent.
C) It will increase 10 percent.
D) It is impossible to tell.

Question

Quizplus · Accepted Answer

With a price elasticity of demand of 1.00, Indy's total spending on beer will remain the same even if the price of each beer increases by 10 percent. This is because the percentage increase in price is equal to the percentage decrease in quantity demanded, resulting in no change in total spending.

Indy Has a Price Elasticity of Demand for Beer of 1.00.Suppose