1.

The total expenditure to be incurred by a family on a good is bound to increase when price of such good rises. Comment.

Answer» <html><body><p></p>Solution :The given statement is not correct. As the price rises, the total <a href="https://interviewquestions.tuteehub.com/tag/expenditure-980222" style="font-weight:bold;" target="_blank" title="Click to know more about EXPENDITURE">EXPENDITURE</a> by the family may either increase, decrease or remain same depending upon elastically of <a href="https://interviewquestions.tuteehub.com/tag/demand-436956" style="font-weight:bold;" target="_blank" title="Click to know more about DEMAND">DEMAND</a>: <br/> (i) In case of less elastic demand, spending will increase if the price rises (like in case of necessity goods such as salt, medicines, etc.). <br/> (<a href="https://interviewquestions.tuteehub.com/tag/ii-1036832" style="font-weight:bold;" target="_blank" title="Click to know more about II">II</a>) In case of highly elastic demand, spending will decrease if the price rises (like in case of luxury goods such as AC, Curved LED <a href="https://interviewquestions.tuteehub.com/tag/tv-662255" style="font-weight:bold;" target="_blank" title="Click to know more about TV">TV</a>. etc.). <br/> (iii) In case of unitary elastic demand, spending will not change with rise in price like in case of normal goods such as <a href="https://interviewquestions.tuteehub.com/tag/scooter-1196494" style="font-weight:bold;" target="_blank" title="Click to know more about SCOOTER">SCOOTER</a>, refrigerator, etc.).</body></html>


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