If demand is unitary elastic,then a price cut:
A) Reduces total revenue.
B) Increases total revenue.
C) Does not change total revenue.
D) Sometimes increases and sometimes decreases total revenue.

Question

Quizplus · Accepted Answer

Unitary elastic demand means that the percentage change in quantity demanded is equal to the percentage change in price. Therefore, a price cut will lead to an equal percentage increase in quantity demanded, resulting in the same total revenue. In other words, the increase in quantity sold will offset the decrease in price, and total revenue will remain the same.

If Demand Is Unitary Elastic,then a Price Cut