1. The problem statement, all variables and given/known data
The demand for good A is unit elastic. This means that a 5 percent increase in price will ______
A) result in an infinite increase in the quantity of A demanded.
B) result in a 1 percent decrease in the quantity of A demanded.
C) result in 5 percent increase in quantity demanded.
D) have no impact on the consumer's spending on the good.
E) increase consumer's spending on the good by 5 percent.
2. Relevant equations
3. The attempt at a solution
I'm sure A to C is false which only leaves the answer to be D or E.
I know unitary elasticity has a proportional change in terms of % change in price and % change in quantity demanded. Assuming consumerspending= P x Q, TR will remain relatively the same. So would it be D?
The demand for good A is unit elastic. This means that a 5 percent increase in price will ______
A) result in an infinite increase in the quantity of A demanded.
B) result in a 1 percent decrease in the quantity of A demanded.
C) result in 5 percent increase in quantity demanded.
D) have no impact on the consumer's spending on the good.
E) increase consumer's spending on the good by 5 percent.
2. Relevant equations
3. The attempt at a solution
I'm sure A to C is false which only leaves the answer to be D or E.
I know unitary elasticity has a proportional change in terms of % change in price and % change in quantity demanded. Assuming consumerspending= P x Q, TR will remain relatively the same. So would it be D?
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