If the elasticity of demand for bagels is equal to 1, moving along the demand curve for bagels, an increase in price will:
A)not affect the quantity purchased.
B)decrease the quantity demanded and increase total revenue.
C)decrease the quantity demanded and decrease total revenue.
D)decrease the quantity demanded and leave total revenue unchanged.

Question

If the elasticity of demand for bagels is equal to 1, moving along the demand curve for bagels, an increase in price will:
A)​not affect the quantity purchased.
B)​decrease the quantity demanded and increase total revenue.
C)​decrease the quantity demanded and decrease total revenue.
D)​decrease the quantity demanded and leave total revenue unchanged.

Quizplus · Accepted Answer

When the elasticity of demand is equal to 1, it means the demand is unit elastic. In this case, a price increase will decrease the quantity demanded, but the total revenue (price times quantity) remains unchanged because the percentage change in quantity demanded is exactly offset by the percentage change in price.

If the Elasticity of Demand for Bagels Is Equal to 1