economics medium True/False

If the price elasticity of demand for a good is exactly equal to one (unitary elastic), a change in price will lead to a proportionate change in quantity demanded, leaving the seller's total revenue completely unchanged.

  1. True
  2. False

Answer: True

Total Revenue is calculated as Price multiplied by Quantity. When demand is unitary elastic, a 10% increase in price causes exactly a 10% drop in quantity demanded. The mathematical effects perfectly cancel each other out, meaning the total revenue generated by the seller remains at its maximum, constant level regardless of price movements.

Topic Microeconomics - Elasticity
Exam Relevance UPSC Prelims, SSC CGL, Banking
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