When demand is unit elastic, a change in price will cause
A) a change in total revenue in the same direction.
B) a change in total revenue in the opposite direction.
C) no change in total revenue.
D) a change in total revenue in either direction depending on whether the price is increasing or decreasing.

Question

Quizplus · Accepted Answer

When demand is unit elastic, a change in price will lead to an equivalent percentage change in quantity demanded. As a result, total revenue will remain the same because the increase or decrease in revenue from a price change will be offset by the decrease or increase in the quantity demanded. Therefore, no change in total revenue occurs.

When Demand Is Unit Elastic, a Change in Price Will