If demand is unit elastic, what is the relationship between revenue and prices?
A) Revenue falls as price rises.
B) Revenue rises as price falls.
C) Revenue and prices rise and fall together.
D) Revenue remains constant as price rises or falls.

Question

Quizplus · Accepted Answer

If demand is unit elastic, it means that the percentage change in quantity demanded is equal to the percentage change in price. In other words, when the price increases, the demand decreases by the same proportion, resulting in constant revenue. The same holds true when the price decreases, resulting in a proportional increase in demand and steady revenue. Therefore, revenue remains constant as price rises or falls.

If Demand Is Unit Elastic, What Is the Relationship Between