If a change in the price of a good results in no change in total revenue:
A)the demand for the good must be elastic
B)the demand for the good must be inelastic
C)the demand for the good must be unit elastic
D)buyers must not respond very much to a change in price

Question

Quizplus · Accepted Answer

If a change in price leads to no change in total revenue, it means that the increase in revenue from selling at a higher price is offset by the decrease in revenue from selling fewer units due to the higher price. This happens when the elasticity of demand is exactly one, which is known as unit elasticity. At this price point, the percentage change in quantity demanded is exactly equal to the percentage change in price, resulting in no change in total revenue. Therefore, the demand for the good must be unit elastic.

If a Change in the Price of a Good Results