Unitary elasticity of demand isChoose one optionEqual to oneGreater than 1Less than 1Zero

Analyzing the Concept of Unitary Elasticity of Demand

1. Understanding Elasticity of Demand: Demand elasticity measures how much the quantity demanded of a good responds to a change in price. There are three types of elasticity:

   • Elastic (greater than 1)
   • Inelastic (less than 1)
   • Unit elastic (equal to 1)

2. Definition of Unitary Elasticity: Unitary elasticity of demand occurs when the percentage change in quantity demanded is exactly equal to the percentage change in price. This is mathematically represented as: $E_d = \frac{\text{Percentage Change in Quantity Demanded}}{\text{Percentage Change in Price}} = 1$

3. Implications of Unitary Elasticity: When demand is unitary elastic, any change in price results in an equal proportionate change in quantity demanded. This implies that total revenue remains constant when the price changes.

Final Answer

Unitary elasticity of demand is Equal to one.