The price elasticity of demand for ground beef has been estimated to be 1.0.If mad cow disease strikes Alberta beef producers and a large percentage of the cattle are removed from the market,how will that affect total expenditures on ground beef,all other things equal?
A) Total expenditures will remain unchanged.
B) Total expenditures will fall by more than 1%.
C) Demand will fall by 1%,but total expenditures will fall by less than 1%.
D) Total expenditures will rise.

Question

Quizplus · Accepted Answer

Since the price elasticity of demand is 1.0, demand is unit elastic. This means that a change in price will result in a proportional change in quantity demanded, leaving total expenditures unchanged.

The Price Elasticity of Demand for Ground Beef Has Been