If demand is unit elastic, a price reduction will
A)increase revenues
B)reduce revenues
C)reduce quantity demanded
D)have no effect on revenues
E)increase profits

Question

Quizplus · Accepted Answer

If demand is unit elastic, a price reduction will lead to an equal increase in quantity demanded, resulting in no net change in total revenue. Therefore, there will be no effect on revenues.

If Demand Is Unit Elastic, a Price Reduction Will