Exams › SSC CGL (Prelims) › General

If price rises by 5% and demand falls by 5%, demand is:

1. Elastic
2. Inelastic
3. Unitary elastic
4. Perfectly elastic

Correct answer: Unitary elastic

Solution

Price elasticity of demand is the percentage change in quantity demanded divided by the percentage change in price. Since both changes are 5%, elasticity equals 1, which is unitary elastic.

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