The president of a major nickel- producing company says that an increase in the price of nickel would have no effect on the total amount spent on nickel. If this is true, the price elasticity of demand for nickel is
A) not calculable from the information given.
B) infinitely elastic.
C) more than one.
D) less than zero.
E) exactly one.

Question

Quizplus · Accepted Answer

If the total amount spent on nickel remains unchanged when the price increases, it indicates that the percentage change in quantity demanded is equal to the percentage change in price, meaning the price elasticity of demand is exactly one (unitary elasticity).

The President of a Major Nickel- Producing Company Says That