alleryWhen the percentage change in quantity demanded is exactly equal to the percentage change in price, the demand is described as:
APerfectly inelastic
BUnit (unitary) elastic
CPerfectly elastic
DRelatively inelastic
Answer & Solution
Correct answer: B. Unit (unitary) elastic
1. Elasticity equals the % change in quantity divided by the % change in price.
2. When the two percentage changes are equal, the ratio equals one.
3. An elasticity of exactly one is called unit or unitary elasticity.
4. So the demand is unit elastic.
_Source: ICAI BoS CA Foundation Paper 4 Business Economics, Ch 2 Unit I "Law of Demand and Elasticity of Demand", p.22_
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