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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA PM Exams › Price elasticity of demand question
Hi, I keep going around in circles with this one.
Question: If PED = 1, indicate if the statement is T/F
“Total Expenditure will remain constant despite price changes”
I put false, BPP book said true.
The way I got False:
For PED = 1, (using an example) a 10% increase in price would cause a 10% decrease in demand.
A decrease in demand would decrease variable costs.
I can see how a PED of 0 would lead to no change in expenditure, but not PED =1.
Thanks
You are correct, and the BPP answer is wrong!
Thanks. I’ll send an erratum via their platform
Great 🙂