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      Question

      If the price of a good increases and the consumer's

      total expenditure on that good remains unchanged, the price elasticity of demand for that good is:
      A Perfectly Elastic Correct Answer Incorrect Answer
      B Perfectly Inelastic Correct Answer Incorrect Answer
      C Unitary Elastic Correct Answer Incorrect Answer
      D Relatively Inelastic Correct Answer Incorrect Answer

      Solution

      Explanation: When |e_d| = 1, the percentage change in quantity demanded exactly offsets the percentage change in price, leaving total expenditure (P * Q) constant.

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