If Demand Is Inelastic, an Increase in the Price of a Good

question 89

Multiple Choice

If demand is inelastic, an increase in the price of a good will cause total expenditures on the good to

• A) fall.
• B) remain constant since the decrease in quantity sold is exactly offset by the price increase.
• C) rise.
• D) rise if it is a normal good and fall if it is an inferior good.

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Definitions:

Unilateral Contract

A contract in which only one party makes an enforceable promise to do or refrain from doing something if the other party performs some act.

Binding Contract

An agreement between parties that is legally enforceable by law, containing all essential elements of a contract.

Unilateral Contract

A contract in which only one party makes a promise or undertakes a performance, while the other party accepts by performing the specified act.

Oral Acceptance

The verbal agreement to the terms of a contract, which in some cases can be legally binding, depending on the nature of the contract and jurisdiction.