If the demand for cigarettes is price inelastic
A) people will pay any price to smoke.
B) an increase in the price of cigarettes would have no effect on the quantity demanded of cigarettes.
C) a fall in cigarette prices would reduce people's expenditures for cigarettes.
D) a decrease in the price of cigarettes would decrease the demand for cigarettes.
E) as the price is reduced, the percentage increase in quantity demanded must be greater than the percentage decrease in price.

Question

Quizplus · Accepted Answer

When demand is price inelastic, a fall in price leads to a smaller percentage increase in quantity demanded than the percentage decrease in price, resulting in reduced total expenditure on the product.

If the Demand for Cigarettes Is Price Inelastic