-A firm raises the price it charges.The firm's total revenue does not change.What can we conclude about the price elasticity of demand?
A) Demand is elastic.
B) Demand is unit elastic.
C) Demand is inelastic.
D) Demand is perfectly elastic.
E) Not enough information is given to conclude anything about price elasticity of demand.

Question

-A firm raises the price it charges.The firm's total revenue does not change.What can we conclude about the price elasticity of demand?
A) Demand is elastic. 
B) Demand is unit elastic. 
C) Demand is inelastic. 
D) Demand is perfectly elastic. 
E) Not enough information is given to conclude anything about price elasticity of demand.

Quizplus · Accepted Answer

When a firm raises its price and total revenue does not change, it indicates that the percentage change in quantity demanded is equal to the percentage change in price, which is characteristic of unit elastic demand.

-A Firm Raises the Price It Charges