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28 January, 04:36

If a product has a unit elastic demand and the price of the product is increased by 10% what do we know about the quantity demanded?

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  1. 28 January, 05:27
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    The quantity demanded is likely to fall by 10%.

    Explanation:

    The elasticity of demand shows the change in quantity demanded due to change in the price of the commodity.

    Unitary elastic demand means that the elasticity of demand is equal to 1. It means that a proportionate change in price will lead to equally proportionate change in price.

    So, if it is a normal good a 10% increase in price will cause the quantity demanded to fall by 10%.
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