If the price elasticity of demand is 1.0,and a firm raises its price by 10 percent,the total revenue will
A)Rise by 10 percent.
B)Fall by 10 percent.
C)Not change.

Question

Quizplus · Accepted Answer

A price elasticity of demand of 1.0 means that demand is exactly proportionate to changes in price. Therefore, if the firm increases its price by 10 percent, the quantity demanded will decrease by 10 percent, resulting in a total revenue that stays the same.

If the Price Elasticity of Demand Is 1