Question

When demand is unit elastic, price elasticity of demand equals a. 1, and total revenue and price move in the same direction. b. 1, and total revenue and price move in opposite directions. c. 1, and total revenue does not change when price changes. d. 0, and total revenue does not change when price changes.

Answer 1

Answer:

a. 1, and total revenue and price move in the same direction

Explanation:

Unit elasticity of demand is when a change in price leads to a proportional change in quantity demanded.

A good has a unit elastic demand when its coefficient of elasticity is equal to one.

If price increases by 20% , quantity demanded falls by 20%.

If price falls by 20%, quantity demanded increases by 20%.

I hope my answer helps you.

Answer 2

The elasticity of demand refers to the change in demand due to the changes taking place in other factors. When the demand is unit elastic, the price elasticity of demand equals 1, and total revenue and price move in the same direction.

What is the Elasticity of demand?

The elasticity of demand can be defined as the phenomenon of change in demand due to the factors such as price or income.

The elasticity of demand is said to be unitary when the changes occurring in demand with respect to change in price is equal.

When demand is unit elastic, the price elasticity of demand will be equal to 1. That means a change in demand will be equal to a change in price.

Change in price does not affect the total revenue and hence the total revenue and price move in the same direction.

Therefore the correct option is A.

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