A unit elastic demand
A)means that the magnitude of the ratio of a change in quantity demanded to a change in price is equal to 1.
B)means that the magnitude of the ratio of a percentage change in quantity demanded to a percentage change in price is equal to 1.
C)means that the magnitude of the ratio of a change in price to a change in quantity demanded is equal to 1.
D)is illustrated by a horizontal demand curve.
E)is illustrated by a vertical demand curve.

Question

Quizplus · Accepted Answer

A unit elastic demand means that a small percentage change in price will result in an equal percentage change in quantity demanded. This is illustrated by a demand curve that is neither perfectly elastic (horizontal) nor perfectly inelastic (vertical). Therefore, the correct choice is B - the magnitude of the ratio of a percentage change in quantity demanded to a percentage change in price is equal to 1.

A Unit Elastic Demand