When demand is unit elastic, an increase in price will cause
A) an increase in total revenue.
B) a decrease in total revenue.
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, the percentage change in quantity demanded is equal to the percentage change in price, resulting in a constant total revenue. Therefore, an increase in price will not cause any change in total revenue.

When Demand Is Unit Elastic, an Increase in Price Will