If the price of a good decreases by 5% and the quantity demanded increases by 5%, then at that price, the good is
A)elastic.
B)inelastic.
C)perfectly inelastic.
D)unit elastic.

Question

Quizplus · Accepted Answer

The fact that the percentage decrease in price is equal to the percentage increase in quantity demanded indicates that the price elasticity of demand is equal to 1. This is known as unit elasticity, which means that a change in price causes an equal percentage change in quantity demanded. Therefore, the good is considered to be unit elastic.

If the Price of a Good Decreases by 5% and the Quantity