If a consumer purchases only two goods (x and y)and the demand for x is elastic,then a rise in the price of x:
A)will cause total spending on good y to rise.
B)will cause total spending on good y to fall.
C)will cause total spending on good y to remain unchanged.
D)will have an indeterminate effect on total spending on good y.

Question

Quizplus · Accepted Answer

When the demand for good x is elastic, a rise in its price will lead to a decrease in the quantity demanded of good x. This will free up income that can be spent on other goods, including good y. Therefore, total spending on good y will rise.

If a Consumer Purchases Only Two Goods (X and Y)and