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Question
Microeconomics
Posted 2 months ago

The city of Xela raised the fees that it charged for dumping waste at the city dump, but the revenue the city earned from dump fees didn't change.

What is the price elasticity of demand for dump fees?
Choose 1 answer:
A) Unit elastic
(B) Elastic
(C) Perfectly inelastic

D Perfectly elastic
(E) Inelastic
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Answer from Sia
Posted 2 months ago
Solution
a
Revenue Unchanged: The city of Xela raised the fees for dumping waste, but the revenue remained unchanged
b
Unit Elastic Demand: When the price elasticity of demand is unit elastic, a change in price does not affect total revenue. This is because the percentage change in quantity demanded is exactly equal to the percentage change in price
Answer
A) Unit elastic
Key Concept
Price Elasticity of Demand
Explanation
When the price elasticity of demand is unit elastic, a change in price results in a proportional change in quantity demanded, leaving total revenue unchanged.

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