Suppose the price elasticity of demand for a good is - 0.2. How will the expenditure on the
Suppose the price elasticity of demand for a good is - 0.2. How will the expenditure on the good be affected if there is a 10% increase in the price of the good?
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Given eD =- 0.2. Since eD is less than one, it is a case of inelastic demand. If there is 10% increase in the price of the good, there will be less than 10% fall in quantity demanded. Result will be rise in the expenditure.
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