If the Demand for a Good Is Unit Elastic

question 143

Multiple Choice

If the demand for a good is unit elastic

• A) a 5 percent increase in price results in a 5 percent increase in total revenue.
• B) a 5 percent increase in price results in a 5 percent decrease in total revenue.
• C) a 5 percent increase in price does not change total revenue.
• D) the demand curve is a straight line with slope of -1.

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Definitions:

Tax

A compulsory monetary fee or a different kind of charge levied on a taxpayer by a government entity to finance government expenses and various public costs.

Buyers

Individuals or entities that purchase goods or services for consumption, use, or investment.

Total Surplus

The combined benefit that all participants (consumers and producers) receive in a market, represented by the sum of consumer and producer surplus.

Market Equilibrium

A condition in a market where the quantity demanded equals the quantity supplied, leading to a stable price.