Question

If the price of a good increases by 5% and the quantity demanded decreases by 5%, then at that price, the good is _____.

Answer 1

Answer: unitary price elastic

Explanation:

A good is unitary price elastic if a change in price leads to the same proportional change in quantity demanded.

The coefficient of a good with unitary elasticity is 1 .

Coefficient of elasticity = percentage change in quantity demanded / percentage change in price

= 5% / 5% = 1

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