When the price of radios decreases 5%, quantity demanded increases 5%. The price elasticity of demand for radios is ________ and total revenue from radio sales will ________.
A) elastic; decrease
B) elastic; increase
C) inelastic; decrease
D) unit elastic; not change

Question

Quizplus · Accepted Answer

The price elasticity of demand is unit elastic because the percentage change in quantity demanded equals the percentage change in price. Therefore, total revenue remains unchanged.

When the Price of Radios Decreases 5%, Quantity Demanded Increases