What happens to the demand for a good if its price increases and total expenditures on other goods also increase?

When analyzing how the demand for a good responds to a change in its price, it's important to consider the concept of price elasticity of demand. If the price of a good increases and total expenditures on other goods also increases, this indicates that consumers are reallocating their spending in a way that suggests they are more responsive to changes in prices for those other goods.

Demand is considered elastic if the quantity demanded changes significantly in response to price changes. In this scenario, the increase in total expenditures on other goods implies that consumers may be substituting away from the good whose price has increased. If they can easily find alternatives that satisfy their needs, this tends to reinforce the idea that the demand for the original good is elastic.

Therefore, when faced with a price increase of a specific good and an increase in spending on other alternatives, it is likely that consumers are decreasing their quantity demanded for the initial good more than proportionately. This demonstrates price elasticity of demand, leading to the conclusion that the demand for the good is elastic in this context.