If a demand curve is unit price elastic throughout, then a decrease in supply will result in:
A) an increase in total revenue.
B) a decrease in total revenue.
C) no change in total revenue.
D) a decrease in demand.

Question

Quizplus · Accepted Answer

If the demand for a good is unit price elastic, then a decrease in supply will result in a proportional increase in the price of the good, which will cancel out the decrease in quantity demanded. Therefore, the total revenue (price x quantity) will remain unchanged.

If a Demand Curve Is Unit Price Elastic Throughout, Then