If the price of a commodity increases by 20%, its demand drops by 20%. Then how it will affect the expenditure? Option 1: Decline in expenditure. Option 2: Rise in expenditure. Option 3: No change in expenditure. Option 4: Small increase in expenditure.

The answer is 'No change in expenditure.'. View full solution:

CUET Economics - If the price of a commodity increases by 20%, its demand drops by 20%. Then how it will affect the expenditure? | PYQs + Solutions

CUET Economics 2025 27 May Shift 2

Micro

Medium

Decline in expenditure.

Rise in expenditure.

No change in expenditure.

Small increase in expenditure.

✅ Correct Option: 3

Related questions:

28 May Shift 1

Which of the following would appropriately define a budget set?

28 May Shift 2

Choose the correct statements in the context of the law of diminishing marginal utility

(A) States that each successive unit of a commodity provides lower marginal utility.

(B) States that each successive unit of a commodity provides higher marginal utility.

(D) States that the marginal utility from consuming each additional unit of a commodity declines as its consumption increases, while keeping consumption of other commodities constant.

Choose the correct answer from the options given below:

30 May Shift 2

Match List-I with List-II

List-I	List-II
(A) Substitution effect stronger than the income effect	(I) Inferior goods
(B) Income effect stronger than the substitution effect	(II) Complementary goods
(C) Demands and income move opposite direction	(III) Normal goods
(D) Goods consumed together	(IV) Giffen goods

Choose the correct answer from the options given below:

CUET Economics 2025 27 May Shift 2 PYQs

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