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Theory of consumer behaviour — Economics STD 11 Commerce — Question

CBSE BoardEnglish MediumSTD 11 CommerceEconomicsTheory of consumer behaviour3 Marks
Question
Suppose there was a $4\%$ decrease in the price of a good, and as a result, the expenditure on the good increased by $2\%$. What can you say about the elasticity of demand?
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Answer

Since fall in price has led to rise in expenditure, i.e., both price and expenditure move in the opposite direction, elasticity of demand is greater than unity $(e_D > 1)$.

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