Question

When a one percent change in price results in a one percent change in quantity demanded in

the opposite direction, demand is
A) relatively inelastic.
B) unitary elastic.
C) perfectly elastic.
D) perfectly inelastic.

Answer 1

B) unitary elastic.

Step-by-step explanation:

Elastic demand describes how sensitive the demand for a product is to changes in prices. A good or service whose demand changes as a result of a change in price is said to be price elastic. When a product does not react to price changes, it is said to be price inelastic.

Unitary elastic demand is when a change in price results in a propositional change in demand in the opposite direction. A percentage change in price causes a similar percentage change in demand. An increase in price leads to a decrease in demand by the same degree, while a reduction in price will result in a proportionate increase in demand.