Suppose that you allow yourself $50 per month to spend on compact disks.You spend exactly this much every month regardless of the price of compact disks.Therefore, your demand for CDs
A)is elastic
B)is inelastic
C)is unit elastic
D)cannot be characterized unless we know the price of a disk
E)cannot be characterized unless we know the price and quantity of compact disks purchased

Question

Quizplus · Accepted Answer

Your demand is unit elastic because you spend a constant amount on CDs regardless of price changes, indicating that the percentage change in quantity demanded equals the percentage change in price.

Suppose That You Allow Yourself $50 Per Month to Spend