If household expenditures on electricity remain constant when the price of electricity increases, the price elasticity for electricity is
A) one (demand is unit elastic).
B) exactly zero.
C) not determinable from the information given.
D) less than one (demand is inelastic).
E) greater than one (demand is elastic).

Question

Quizplus · Accepted Answer

When household expenditures remain constant despite a price increase, it indicates that the percentage change in quantity demanded is equal to the percentage change in price, which is characteristic of unit elastic demand.

If Household Expenditures on Electricity Remain Constant When the Price