If the total expenditure on cars increases when the price of cars rises,the price elasticity of demand for cars is
A)greater than one (demand is elastic).
B)less than one (demand is inelastic).
C)equal to one (demand is unit elastic).
D)exactly zero.
E)not determinable from the information given.

Question

Quizplus · Accepted Answer

When the total expenditure on cars increases as the price of cars rises, it means that the percentage change in quantity demanded is less than the percentage change in price. This indicates that the demand for cars is inelastic, with a price elasticity of demand that is less than one.

If the Total Expenditure on Cars Increases When the Price