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A family spending has to incease ,w hen the price incerases, Defend or refute. |
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Answer» SOLUTION :This statement is REFUTED. It is not necessary that family spending increases with increases in price. As the price rises, spending by family may: (a) increase (b) DECREASE or (c) remian same , depending upon elasticity of dmeand. (a)In case of goods having less ELASTIC DEAMAND , expenditure by the family will increase, if the price rises ( e.g in case of necessities like salt, textbooks etc.) (b) In case of goods haviing highly elastic demand , expenditure will decrease, if the price rises ( e.g in case of luxuries like AC, cars etc.) (c) in case of goods having unitary elastic demand, spending / expenditure will not change with rise in price of the good ( e.g in case of normal goods, fans, refrigerator etc. ) |
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