PRC-3 · Chapter 11 · Question 25 of 57
If a 5% increase in the price of a good leads to exactly a 5% decrease in the quantity demanded, total revenue will remain unchanged. The Price Elasticity of Demand (PED) is:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) 1
Explanation
When the percentage change in quantity perfectly matches the percentage change in price, the elasticity coefficient is 1 (unitary elastic).
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