The demand for good A is unit elastic if
A)a 5 percent fall in the price of A results in an infinite increase in the quantity of A demanded.
B)a 5 percent rise in the price of A results in a 10 percent decrease in the quantity of A demanded.
C)any increase in the price of A results in a 1 percent decrease in the quantity of A demanded.
D)a 5 percent rise in the price of A results in no change in the quantity of A demanded.
E)a 5 percent rise in the price of A results in a 5 percent decrease in the quantity of A demanded.

Question

Quizplus · Accepted Answer

In a unit elastic demand, a percentage change in price will result in an equal percentage change in the quantity demanded. Therefore, a 5 percent rise in the price of A will result in a 5 percent decrease in the quantity of A demanded.

The Demand for Good a Is Unit Elastic If