The price elasticity of demand for cabbage has been estimated to be 0.25. If an insect infestation destroys 20% of the nation’s cabbage crop (and thus reduces supply), how will that affect total expenditures on cabbage, all other things equal?
A) Total expenditures will rise.
B) Total expenditures will fall.
C) Total expenditures will remain unchanged.
D) The information is insufficient to answer the question.