The Bear Corporation finds that its total spending on machine parts increases after the price of machine parts falls, other things being equal. Which of the following is true about the Bear Corporation's demand for machine parts with the price change?
A) It is unit elastic.
B) It is price elastic.
C) It is price inelastic.
D) It is perfectly inelastic.

Question

Quizplus · Accepted Answer

The fact that the Bear Corporation's total spending on machine parts increases after the price of machine parts falls suggests that the corporation's demand for machine parts is price elastic. In other words, the percentage change in quantity demanded is greater than the percentage change in price.

The Bear Corporation Finds That Its Total Spending on Machine