If the price elasticity of demand is unit then a fall in price ?
Correct answer: B. Leaves revenue unchanged
- A. Reduces revenue
- B. Leaves revenue unchanged
- C. Increase revenue
- D. Reduces costs
Explanation
With unit price elasticity of demand, the percentage change in quantity exactly offsets the percentage change in price. Total revenue therefore remains unchanged when price falls.
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Individual consumers, firms and markets are examined through demand and supply, elasticity, consumer choice, production, costs, revenue and the determination of prices and output. The topic also covers market structures such as perfect competition, monopoly and oligopoly, plus market failure, externalities and the distinction between microeconomic decisions and economy-wide outcomes.
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