If an Atlanta bakery raises the price of their rye bread by 11 percent and the quantity demanded decreases by 11 percent,then the demand for the rye bread is ________ and the bakery's total revenue ________.
A) unit elastic; does not change
B) unit elastic; increases
C) unit elastic; decreases
D) elastic; does not change
E) inelastic; does not change

Question

Quizplus · Accepted Answer

When the percentage change in quantity demanded is equal to the percentage change in price, the demand is considered unit elastic. In this case, both changes are 11 percent, indicating unit elasticity. Since the percentage increase in price is exactly offset by the percentage decrease in quantity demanded, the total revenue remains unchanged.

If an Atlanta Bakery Raises the Price of Their Rye