I am learning the Economic class and I have a very specific question regarding a basic economic concept: change of expenditure in terms of change of price and change of quantity.
I'v learnt below:
1. Expenditure = Price x Quantity (by definition) 2. change of Expenditure = change of Price + change of Quantity
I am really confused about how #2 above is inferred. I thought change of Expenditure is defined as
E - Expenditure, P - Price, Q - Quantity (E2 - E1) / E1 = (P2 x Q2 - P1 x Q1) / P1 x Q1
But this is really not equal to
change of Price + change of Quantity = (P2 - P1) / P1 + (Q2 - Q1) / Q1
Can someone show me how does the formula "change of Expenditure = change of Price + change of Quantity" hold please?