If the demand for a good is unit elastic, then:
A) revenues increase when the price goes up.
B) revenues decrease when the price goes up.
C) any change in price is matched by an equal and opposite percentage change in quantity, so revenues stay the same.
D) revenues decrease regardless of the direction of the price change.

Question

Quizplus · Accepted Answer

If demand for a good is unit elastic, then any change in the price will be matched by an equal and opposite percentage change in quantity demanded. This means that total revenue (price x quantity) will remain the same, resulting in neither an increase nor a decrease in revenue.

If the Demand for a Good Is Unit Elastic, Then