Suppose there was a 4% decrease in the price of a good, and as a result, the expenditure on the good increased by 2%. What can you say about the elasticity of demand?
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Suppose there was a 4% decrease in the price of a good and as a result, expenditure on the good increased by 2%. ... Since fall in price has led to rise in expenditure, i.e., both price and expenditure move in the opposite direction, elasticity of demand is greater than unity (eD > 1).
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highly elastic
Explanation:
highly elastic or greater than 1
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