Home › CA Foundation › Business Economics › Elasticity of Demand › When the percentage change in quantity demanded …
When 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_
Related questions
Using the Point method on a straight-line demand curve AB, elasticity at point P is given Under the Total Outlay method, demand is said to be unitary elastic when:Which of the following is NOT one of the four methods of measuring elasticity of demand liCross elasticity of demand (Ec) measures:Income elasticity of demand (Ey) is defined as:If proportionate change in demand equals proportionate change in price, the demand is:If a small change in price produces a much larger proportionate change in demand, the demaIf the price of a good changes and demand does not change at all, the price elasticity of