A good with an absolute value of the price elasticity of demand of 1.0 is classified as:
A) elastic.
B) inelastic.
C) unit elastic.
D) perfectly inelastic.

Question

Quizplus · Accepted Answer

A good with an absolute value of the price elasticity of demand of 1.0 is classified as unit elastic. This means that a price increase or decrease of 1% will result in a proportional change of 1% in the quantity demanded, resulting in no change in total revenue. A good with an absolute value of elasticity less than 1 is classified as inelastic and a good with an absolute value of elasticity greater than 1 is classified as elastic. A perfectly inelastic good has an elasticity of 0 while a perfectly elastic good has an elasticity of infinity.

A Good with an Absolute Value of the Price Elasticity