Q983
Billoo currently spends Rs. 200 per month on long-distance telephone calls. If the telephone company decides to reduce the rate from Rs. 10 a minute to Rs. 5 a minute, then
A.
Whether she spends more or less than Rs. 200 per month depends on whether long-distance telephone calls are a normal good or an inferior good
B.
She will spend less than Rs. 200 per month on long-distance telephone call as the new price is an effective price floor
C.
Whether she spends more or less than Rs. 200 per month on long-distance telephone calls depends on whether her demand is elastic or inelastic
AnswerD.
She will spend more than Rs. 200 per month on long-distance telephone calls as her demand has shifted out
Answer: Option C
Solution
Answer: Option C
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