If the price elasticity of demand is 1.0,and a firm raises its price by 10 percent,the total revenue will
A)Rise by 10 percent.
B)Fall by 10 percent.
C)Not change.
D)Rise by 100 percent.

Question

Quizplus · Accepted Answer

If the price elasticity of demand is 1.0, then a 10 percent increase in price will result in a 10 percent decrease in quantity demanded. Therefore, the increase in price is exactly offset by the decrease in quantity, resulting in no change in total revenue.

If the Price Elasticity of Demand Is 1