-The elasticity of demand along the demand curve shown in the above figure is constant and equal to 1. Thus,
A) area 0BCF equals area FGDE.
B) area 0BCF equals area 0AGF.
C) area 0BCF equals area 0ADE.
D) area ABCG equals area 0AGF.

Question

-The elasticity of demand along the demand curve shown in the above figure is constant and equal to 1. Thus,
A) area 0BCF equals area FGDE. 
B) area 0BCF equals area 0AGF. 
C) area 0BCF equals area 0ADE. 
D) area ABCG equals area 0AGF.

Quizplus · Accepted Answer

When the elasticity of demand is constant and equal to 1 (unitary elasticity), the expenditure on the product remains the same at all prices. This means the area representing total revenue (price × quantity) at any two points on the demand curve is the same. Therefore, the area under the demand curve from the origin to any point (representing total revenue) remains constant, making option C correct: area 0BCF equals area 0ADE.

-The Elasticity of Demand Along the Demand Curve Shown in the Above