question archive The price elasticity of demand for automobiles is -0
The price elasticity of demand for automobiles is -0
Subject:EconomicsPrice:2.88 Bought3
The price elasticity of demand for automobiles is -0.84. If the price of automobiles increases, the
a. total annual expenditure on automobiles will decrease.
b. total annual expenditure on automobiles will remain constant.
c. total revenue of automobile sellers will decrease.
d. total annual expenditure on automobiles will increase.
Purchase A New Answer
Custom new solution created by our subject matter experts
GET A QUOTE
Answer Preview
Correct Option: d. total annual expenditure on automobiles will increase.
Explanation: The price elasticity of demand for automobiles is given as inelastic. This means that the total expenditure will flow in the same direction as the price. Therefore, an increase in price in the given scenario will cause an increase in the total expenditure.
