When the absolute price elasticity of demand equals 1, demand is
A) elastic.
B) unit-elastic.
C) inelastic.
D) undetermined without more information.

Question

Quizplus · Accepted Answer

When the absolute price elasticity of demand equals 1, demand is referred to as unit-elastic, which means that the change in the price of a good results in an equal percentage change in the quantity demanded. This implies that the total revenue generated by the sale of a good remains constant when the price changes.

When the Absolute Price Elasticity of Demand Equals 1, Demand