Suppose there was a 4 % decrease in the price of a good, and as a result, the expenditure on the good increased by 2 %. What can you say about the elasticity of demand?
Decrease in price is 4% whereas increase in expenditure is 2%
The percentage change in price is more than the percentage change in expenditure, which means the percentage change in demand is more than the percentage change in price.
This means the elasticity is more than 1, thus demand is elastic.