Asked by Tyrin Davis on Jul 14, 2024
Verified
A 4 percent reduction in the price of a product has zero effect on the dollar amount of consumer expenditure on the product. The price elasticity of demand is
A) zero.
B) greater than zero.
C) greater than zero but less than 1.
D) equal to 1.
Consumer Expenditure
The total amount spent by consumers on goods and services in a given period.
Total Revenue
The overall amount of money generated from the sale of goods and services before any expenses are subtracted.
- Acquire knowledge on the notion of price elasticity of demand and the techniques used to compute it.
- Understand the impact of price changes on consumer expenditure.
Verified Answer
SS
SABAHAT SHAHIDJul 17, 2024
Final Answer :
D
Explanation :
The price elasticity of demand is equal to 1, indicating unit elasticity. This means that the percentage change in quantity demanded is exactly equal to the percentage change in price, resulting in no change in total expenditure.
Learning Objectives
- Acquire knowledge on the notion of price elasticity of demand and the techniques used to compute it.
- Understand the impact of price changes on consumer expenditure.