When a fall in price of a commodity reduces total expenditure and a rise in price increases it, price elasticity of demand will be :

The relationship between price elasticity of demand (PED) and total expenditure (TE) is a fundamental concept in consumer theory. When demand is inelastic (PED < 1), price and total expenditure move in the same direction. This occurs because the percentage change in quantity demanded is smaller than the percentage change in price [1]. Consequently, if the price falls, the slight increase in quantity is insufficient to offset the lower price per unit, leading to a decrease in total expenditure. Conversely, a rise in price leads to a proportionally smaller drop in demand, causing total expenditure to increase. In contrast, for elastic demand (PED > 1), price and expenditure move in opposite directions, while for unitary elastic demand (PED = 1), total expenditure remains constant regardless of price changes. Therefore, the described scenario indicates inelastic demand.

Sources

1. [1] Microeconomics (NCERT class XII 2025 ed.) > Chapter 2: Theory of Consumer Behaviour > EXAMPLE 2.2 > p. 29