Asked by Danielle Toone on Jun 13, 2024
Verified
The price elasticity of demand for a textbook is estimated to be 1 no matter what the price or quantity demanded. In this case,
A) a 10 percent increase in price will result in a 10 percent increase in total revenues.
B) a 10 percent increase in price will result in a 10 percent decrease in the quantity demanded.
C) a 10 percent increase in price will result in a 10 percent decrease in total revenues.
D) a 10 percent increase in price will result in a 10 percent increase in quantity demanded.
Price Elasticity
An indicator showing the sensitivity of the demanded quantity of a good to price adjustments, computed by the percentage change in demand relative to the percentage change in price.
- Comprehend the notion of unit elasticity and its importance in analyzing demand.
Verified Answer
VG
Vat's GandhiJun 17, 2024
Final Answer :
B
Explanation :
When the price elasticity of demand is equal to 1, it means the percentage change in quantity demanded is equal to the percentage change in price. Therefore, a 10 percent increase in price will result in a 10 percent decrease in the quantity demanded.
Learning Objectives
- Comprehend the notion of unit elasticity and its importance in analyzing demand.