When demand is unit elastic, a change in price causes total revenue to stay the same because
A)the percentage change in quantity demanded exactly offsets the percentage change in price.
B)buyers are buying the same quantity.
C)total revenue never changes with price changes.
D)the change in profit is offset by the change in production cost.

Question

Quizplus · Accepted Answer

Unit elastic demand means that the percentage change in quantity demanded is equal to the percentage change in price. As a result, an increase in price will lead to a decrease in quantity demanded such that the total revenue earned from selling the product remains the same. Similarly, a decrease in price will lead to an increase in quantity demanded such that the total revenue earned from selling the product remains the same.

When Demand Is Unit Elastic, a Change in Price Causes