When Demand Is Unit Elastic,what Is the Price Elasticity and What

question 183

Multiple Choice

When demand is unit elastic,what is the price elasticity and what is the effect on total revenue of a price change

• A)The price elasticity exactly equals 1 and total revenue does not change when price changes.
• B)The price elasticity exactly equals 1 and total revenue and price move in opposite directions.
• C)The price elasticity exactly equals 1 and total revenue and price move in the same direction.
• D)The price elasticity approaches infinity and total revenue does not change when price changes.

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Definitions:

Midpoint Method

A technique used in economics for calculating elasticity by taking the average of the starting and ending prices and quantities to find a percentage change.

Price Elasticity

A measure of how much the quantity demanded of a good responds to a change in the price of that good, reflecting the product's sensitivity to price changes.

Supply Curve

The supply curve is a graphical representation showing the relationship between the price of a good and the quantity of the good that suppliers are willing to sell.

Price Elasticity

A gauge of how sensitively the demand or supply for a product reacts to alterations in its price.