Question : If demand is unitary elastic, a 25% price increase will produce:
Option 1: 25% increase in overall revenue.
Option 2: There has been no change in the quantity demanded.
Option 3: 1% reduction in quantity demanded
Option 4: 25% reduction in quantity demanded
Correct Answer: 25% reduction in quantity demanded
Solution : When the number equals one, the elasticity of demand is unitary. In other words, quantity and price change at the same rate. If demand is unitary elastic, a 25% increases in price will result in a 25% reduction in the quantity demanded. Hence d is the correct answer.
Question : When demand is unitary elastic, a price increase results in:
Question : When demand is perfectly elastic, a decrease in price will result in:
Question : If the price elasticity of demand for a good is 2.5, then a 10% decrease in price will result in a:
Question : If the price elasticity of demand for a good is -0.5, then a 10% increase in price will result in a:
Question : If the price elasticity of demand for a good is -1.5, then a 10% increase in price will result in a:
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