Expenditure Changes from Price Elasticity

Steps:

• Identify elasticities: Assume table shows Kim has inelastic demand for meals (|Ed|<1) and elastic for tickets (|Ed|>1); Lee has elastic for meals and inelastic for tickets.
• For meals price rise: Inelastic demand means quantity falls less than price rises, so Kim's expenditure on meals increases; Lee's decreases.
• For tickets price fall: Elastic demand means quantity rises more than price falls, so Kim's expenditure on tickets increases; Lee's decreases.
• Compare: Only Kim's total spending rises on both goods.

Why C is correct:

• Price elasticity of demand determines expenditure: inelastic for price rise and elastic for price fall both increase consumer spending (expenditure = P × Q).

Why the others are wrong:

• A: Insufficient market-wide elasticity data to determine total restaurant revenue.
• B: Lee's elastic demand for meals reduces spending there; inelastic for tickets reduces spending there too.
• D: Elastic demand for tickets would increase cinema revenue from price fall.

Final answer: C