If demand is unit elastic:
A) revenue and prices rise and fall together.
B) revenue rises as price falls.
C) revenue falls as price rises.
D) revenue remains constant as price rises or falls.

Question

Quizplus · Accepted Answer

In the case of unit elastic demand, a change in price will result in an equal proportionate change in quantity demanded. Therefore, the percentage change in price will be equal to the percentage change in quantity demanded, resulting in constant total revenue. Thus, the revenue remains constant as price rises or falls.

If Demand Is Unit Elastic