Economics: Principles, Problems, and Policies, 19th Edition

Published by McGraw-Hill Education
ISBN 10: 0073511447
ISBN 13: 978-0-07351-144-3

Chapter 4 - Elasticity - Questions - Page 90: 6g

Answer

Total revenue would remain the same/unchanged.

Work Step by Step

Since demand is that of unit elasticity, a change in price would result in a proportionate change in quantity demanded. Thus, regardless if price decreases or increases, total revenue would remained unchanged as in the case of a price decrease, a decrease in price would be met with a proportionate change in quantity, and therefore the area of (P x Q) gained would be equal to the area lost.
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