According to the estimates of a Harvard economist, the demand for cocaine is unit elastic.This means if the price of cocaine were to rise by 10 percent, (i) quantity consumed would fall 10 percent and (ii) dealer income from the sale of cocaine would fall 10 percent.Which of these two statements are correct?
A) i and ii
B) i not ii
C) ii not i
D) neither i nor ii

Question

Quizplus · Accepted Answer

In a unit elastic demand, the percentage change in quantity demanded is equal to the percentage change in price, so statement (i) is correct. However, total revenue (dealer income) remains unchanged, not falls, so statement (ii) is incorrect.

According to the Estimates of a Harvard Economist, the Demand