Suppose the own price elasticity of demand for good X is −0.5,and the price of good X increases by 10 percent.What would you expect to happen to the total expenditures on good X?
A) Increase
B) Decrease
C) Remain unchanged
D) Neither increase, decrease, nor remain unchanged

Question

Quizplus · Accepted Answer

Since the own price elasticity of demand for good X is inelastic (-0.5 < -1), an increase in price leads to a less than proportionate decrease in quantity demanded, resulting in an increase in total expenditures on good X.

Suppose the Own Price Elasticity of Demand for Good X