Total Expenditure and Price Elasticity
Total expenditure (T.E) = Price x Quantity
a) Elastic Demand
If demand is elastic (ED > 1), the fall in price leads to the rise in whole expenditure and a rise in price decreases it.
b) Unitary Elastic Demand
If demand is unitary elastic (ED = 1), a fall or rise in the price leaves whole expenditure unchanged.
c) Inelastic Demand
If the demand is inelastic (ED < 1), a fall in the price leads to a reduction in whole expenditure and a rise in price increases whole expenditure.
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