Exhibit 5-16
-Consider Exhibit 5-16. Since the product P x Q remains constant between points a and b, demand must be
A) relatively inelastic
B) perfectly inelastic
C) unit elastic
D) perfectly elastic
E) relatively elastic

Question

Exhibit 5-16 
-Consider Exhibit 5-16. Since the product P x Q remains constant between points a and b, demand must be
A) relatively inelastic 
B) perfectly inelastic 
C) unit elastic 
D) perfectly elastic 
E) relatively elastic

Quizplus · Accepted Answer

Since P x Q remains constant between a and b, the elasticity of demand is equal to 1 (unit elastic). At this point, a change in price will be offset by an equal change in quantity demanded, resulting in no change in total revenue.

Exhibit 5-16 -Consider Exhibit 5-16. Since the Product P X Q Remains