Read the two statements and choose the correct option.
I. If demand is elastic, a rise in price lowers total expenditure on the good.
II. If demand is inelastic, a rise in price lowers total expenditure on the good.

Only ICorrect answerYour answerOnly IICorrect answerYour answerBoth I and IICorrect answerYour answerNeither I nor IICorrect answerYour answer

Show the answer and explanation

CorrectNot quiteAnswer A

Correct answer: A

I is true: with elastic demand, quantity falls by a larger percentage than price rises.
II is false: with inelastic demand, quantity falls less, so spending rises.

Ten questions from Price Elasticity of Demand, at your own pace.

Ten questions from Price Elasticity of Demand, at your own pace.

Read the two statements and choose the correct option.I. If demand is elastic, a rise in price lowers total expenditure on the good.II. If demand is inelastic, a rise in price lowers total expenditure on the good.