If Demand Is Unit Elastic, Then a 10 Percent Increase

question 207

True/False

If demand is unit elastic, then a 10 percent increase in price will lead to a 10 percent drop in quantity demanded.

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Definitions:

Deadweight Loss

A reduction in economic effectiveness that happens when a good or service does not reach or cannot reach equilibrium.

Monopolist

A single seller in a market who has significant control over the price and supply of a product.

Marginal Cost

The variation in the overall expense that occurs as a result of increasing the production quantity by one unit.

Consumer Surplus

The benefit consumers receive when they pay less for a product than what they were prepared to pay, measured by the area beneath the demand curve and above the price.