If the price of a good increases from $100 to $110 and quantity demanded decreases from 100 units to 90 units, the demand would be classified as unit elastic.

Question

Quizplus · Accepted Answer

If the price of a good increases and the quantity demanded decreases, this indicates an inelastic demand. If the demand were unit elastic, the percentage change in quantity demanded would be equal to the percentage change in price, resulting in a proportionate change in total revenue. However, in this scenario, the percentage change in quantity demanded (-10%) is less than the percentage change in price (+10%), resulting in an increase in total revenue, which is a characteristic of inelastic demand.

If the Price of a Good Increases from $100 to $110