[amp_mcq option1=”Unit elasticity” option2=”Less than unit elasticity” option3=”Perfectly elastic” option4=”Perfectly inelastic” correct=”option1″]
The correct answer is A. Unit elasticity.
Unit elasticity of demand is a situation where the percentage change in the quantity demanded is equal to the percentage change in the price. This means that a 1% increase in price will lead to a 1% decrease in demand, and vice versa.
Option B, less than unit elasticity, is a situation where the percentage change in the quantity demanded is less than the percentage change in the price. This means that a 1% increase in price will lead to a less than 1% decrease in demand, and vice versa.
Option C, perfectly elastic, is a situation where the quantity demanded is infinitely responsive to changes in price. This means that even a small change in price will lead to a large change in demand.
Option D, perfectly inelastic, is a situation where the quantity demanded is not responsive to changes in price. This means that even a large change in price will not lead to a change in demand.