Question

If the price elasticity of demand for a product equals 1, as its price rises the:______

Answer 1

Answer:

c. total revenue does not change.

Explanation:

A price elasticity of demand can be defined as a measure of the responsiveness of the quantity of a product demanded with respect to a change in price of the product, all things being equal.

Mathematically, the price elasticity of demand is given by the formula;

$Price \; elasticity of demand = \frac {Percentage \; change \; in \; quantity \; demanded}{Percentage \; change \; in \; price}$

The demand for goods is said to be elastic, when the quantity of goods demanded by consumers with respect to change in price is very large. Thus, the more easily a consumer can switch to a substitute product in relation to change in price, the greater the elasticity of demand.

Generally, consumers would like to be buy a product as its price falls or become inexpensive.

For substitute products (goods), the price elasticity of demand is always positive because the demand of a product increases when the price of its close substitute (alternative) increases.

If the price elasticity of demand for a product equals 1, as its price rises the total revenue does not change because the demand is unit elastic.