John's Bait Shop was surprised to learn that when it raised prices by 10 percent, total revenue was unaffected.This is because the elasticity for bait is
A)unit elastic.
B)inelastic.
C)elastic.
D)Not enough information is given.

Question

Quizplus · Accepted Answer

The fact that total revenue was unaffected when prices were raised by 10 percent indicates that the percentage increase in price was exactly offset by the percentage decrease in quantity demanded. This is characteristic of unit elasticity, which means that the percentage change in quantity demanded is exactly equal to the percentage change in price. If the elasticity were inelastic, total revenue would increase with a price increase, and if it were elastic, total revenue would decrease with a price increase. Not enough information is given to choose option D.

John's Bait Shop Was Surprised to Learn That When It