Question

If demand is unitary elastic, a reduction in price leaves total revenue unchanged because:

A. the percentage increase in quantity demanded exceeds the percentage decrease in price.
B. the percentage changes in quantity demanded and price are the same.
C. demand is unresponsive to changes in price.
D. the percentage decrease in price exceeds the percentage increase in quantity demanded.

Answer 1

Answer: The percentage changes in quantity demanded and price are the same.

Step-by-step explanation: Unitary elastic demand for a good implies that as price of a good changes its demand also changes in the same proportion leaving total revenue unchanged.

Thus, a reduction in price will be accompanies by an equal percentage increases in the quantity demanded.