Question

Which of the following is a possible change in total revenue that occurs if you increase the price of a good with unit elasticity?

A 1 percent Correct Answer Incorrect Answer
B 10 percent Correct Answer Incorrect Answer
C 2 percent Correct Answer Incorrect Answer
D 5 percent Correct Answer Incorrect Answer
E 0 percent Correct Answer Incorrect Answer

Solution

Unit elasticity means that an increase in price results in an equal decrease in quantity. As a result, TR doesn’t change if the price increases on a good with a unit elastic demand

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