If a bakery raises the price of its bread by 11 per cent and the quantity demanded decreases by 11 per cent, then the demand for its bread is ________ and the bakery's total revenue ________.
A) unit elastic; increases
B) elastic; does not change
C) unit elastic; decreases
D) unit elastic; does not change
E) inelastic; does not change

Question

Quizplus · Accepted Answer

When the percentage change in quantity demanded is equal to the percentage change in price, the demand is considered unit elastic. In this case, both the price and quantity demanded changed by 11 percent, indicating unit elasticity. Since the percentage increase in price is exactly offset by the percentage decrease in quantity demanded, the total revenue remains unchanged.

If a Bakery Raises the Price of Its Bread by 11