If an increase in the price of a good has no impact on the total revenue in that market, demand must be Check My Work (2 r a. price inelastic b. price elastic c. unit price elastic d. all of the answer choices

The correct answer is: **c. unit price elastic** **Explanation:** Total revenue (TR) is calculated as the product of price (P) and quantity sold (Q): \[ \text{Total Revenue} = P \times Q \] When the price of a good increases and **total revenue remains unchanged**, it implies that the percentage increase in price is exactly offset by the percentage decrease in quantity demanded. Mathematically, this situation occurs when the **price elasticity of demand is exactly equal to 1**, meaning the demand is **unit price elastic**. Here's a breakdown of the elasticity concepts: - **Price Inelastic (Elasticity < 1):** When demand is inelastic, an increase in price leads to an increase in total revenue because the percentage drop in quantity demanded is less than the percentage increase in price. - **Price Elastic (Elasticity > 1):** When demand is elastic, an increase in price leads to a decrease in total revenue because the percentage drop in quantity demanded is greater than the percentage increase in price. - **Unit Price Elastic (Elasticity = 1):** Here, any change in price does not affect total revenue because the percentage change in price is exactly balanced by the opposite percentage change in quantity demanded. Since the total revenue doesn't change with a price increase, the demand must be **unit price elastic**. **Answer:** c. unit price elastic