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in Economics by (106k points)

When price of a good falls from Rs. per unit to Rs.7 per unit, its demand rises from 12 units to 16 units. Compare expenditure on the good to determine whether demand is elastic or inelastic.

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Price (Rs.) Quantity (Units) TE (Rs.)
8 12 96
7 16 112

Price decreases and TE increases. It shows inverse relationship between price and total expenditure. So, there is elastic demand or greater than unitary elastic demand.

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