Question

What does unitary elastic demand mean?


The elasticity of demand is different at each unit on the price range.


The demand is inelastic at a low price but becomes elastic as the price rises.


The percentage change in quantity demanded is equal to the percentage change in price.


The elasticity of demand is mathematically determined.

Answer 1

Unitary elastic demand refers to a situation where the percentage change in quantity demanded is equal to the percentage change in price. In other words, if the price of a good or service changes by a certain percentage, the quantity demanded will change by the same percentage, resulting in a total revenue that remains constant. For example, if the price of a product increases by 10%, the quantity demanded will decrease by 10%, maintaining total revenue at the same level.

Thus, the correct statement is:

**The percentage change in quantity demanded is equal to the percentage change in price.**