PRC-3 · Chapter 11 · Question 49 of 57
If the price of a specific good falls, and as a direct result, the total expenditure by consumers on that good also falls, the demand for the good is:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) Inelastic
Explanation
According to the total outlay method, if price and total expenditure move in the same direction (both fall), it means the percentage increase in quantity was smaller than the price drop, indicating inelastic demand.
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