Suppose the price elasticity of demand for your economics textbook is −1. If the publisher raises the price by 5 percent:
A)revenues will rise by 5 percent.
B)quantity demanded will rise by 5 percent.
C)total revenue will not change.
D)revenues will fall.
E)revenues will fall by 5 percent.

Question

Suppose the price elasticity of demand for your economics textbook is −1. If the publisher raises the price by 5 percent:​
A)revenues will rise by 5 percent.
B)quantity demanded will rise by 5 percent.
C)total revenue will not change.
D)revenues will fall.
E)revenues will fall by 5 percent.

Quizplus · Accepted Answer

When the price elasticity of demand is -1, it indicates unitary elasticity, meaning that a percentage change in price results in an equal percentage change in quantity demanded in the opposite direction, leaving total revenue unchanged.

Suppose the Price Elasticity of Demand for Your Economics Textbook