Please wait...
1800-212-7858 (Toll Free)
9:00am - 8:00pm IST all days

or

Thanks, You will receive a call shortly.
Customer Support

You are very important to us

For any content/service related issues please contact on this toll free number

022-62211530

Mon to Sat - 11 AM to 8 PM

What is total expenditure method? Explain the three possible situations in the total expenditure method.

Asked by Topperlearning User 25th April 2016, 9:43 AM
Answered by Expert
Answer:

Total expenditure method is to measure the elasticity of demand. How much change in expenditure with a change in the price of a good are measured through this method. Three possible situations under this method are as follows:

  1. If a rise or fall in the price of a good has no change in its total expenditure, then the elasticity of demand is unitary.
  2. If there is fall in the price of a good, total expenditure increases and if there is rise in the price of a good, the total expenditure decreases, then the demand for that good is greater than unitary elastic.
  3. If there is fall in the price of a good, total expenditure decreases and if there is rise in the price of a good, the total expenditure increases, then the demand for that good is less than unitary elastic.
Answered by Expert 25th April 2016, 11:43 AM
Rate this answer
  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10

You have rated this answer /10

Your answer has been posted successfully!