When Demand Is Unit Elastic, a Change in Price Causes

question 8

Multiple Choice

When demand is unit elastic, a change in price causes total revenue to stay the same because

• A)the percentage change in quantity demanded exactly offsets the percentage change in price.
• B)buyers are buying the same quantity.
• C)total revenue never changes with price changes.
• D)the change in profit is offset by the change in production cost.

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Definitions:

Behavioral Economics

A field of economics that studies the effects of psychological, social, cognitive, and emotional factors on economic decisions.

Utility Maximization

The economic principle that consumers choose to allocate their resources in a way that maximizes their satisfaction or utility.

Economic Agents

Individuals, households, firms, and governments that make decisions about the allocation of resources and interact in markets.

Clear Preferences

The state of having distinct and definite likes or choices, which can be consistently ranked or ordered by an individual or a group.