Final answer:
The statement is false. For price-elastic demand, an increase in price usually leads to a decrease in total consumer spending, as consumers are more responsive to price changes and will reduce their quantity purchased significantly.
Step-by-step explanation:
When demand is price-elastic, an increase in price will not lead to increased total consumer spending for the product; this statement is false. Price elasticity of demand indicates how responsive the quantity demanded is to a change in price. With elastic demand, consumers are sensitive to price changes, meaning they will significantly reduce the quantity they buy when the price increases. Consequently, when the price goes up, total spending by consumers tends to decrease, not increase, as they will buy much less of the product or service.
In the context of cost-saving with elastic demand, when a technological improvement or other cost-saving measure shifts the supply curve to the right, prices tend to lower only slightly and the quantity supplied increases. This differs from an inelastic demand scenario, where cost-savings lead to substantially lower prices and a greater benefit to consumers. Therefore, with elastic demand, if a firm were to increase prices, they would likely see a disproportionate fall in quantity demanded, outweighing any revenue increase from higher prices and reducing total consumer spending on the product.