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Question
If the price of a commodity and total expenditure on that commodity change in the same direction, the price elasticity of demand will be ______.
Options
Greater than one
Less than one
Equal to zero
Equal to infinity
Solution
If the price of a commodity and total expenditure on that commodity change in the same direction, the price elasticity of demand will be Less than one.
Explanation:
When demand is inelastic, there is a direct relationship between price and total consumer expenditure; thus, demand elasticity is less than one.
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