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AICPA CPA-Business Exam - Topic 1 Question 105 Discussion

If demand is unit elastic:
C) An increase in price will result in an increase in total revenue.
A) An increase in price will result in a decline in total revenue.
B) An increase in price will result in a decline the quantity demanded that is less than the increase in price.
D) An increase in price will have no effect on total revenue.

AICPA CPA-Business Exam - Topic 1 Question 105 Discussion

Actual exam question for AICPA's CPA-Business exam
Question #: 105
Topic #: 1
[All CPA-Business Questions]

If demand is unit elastic:

Show Suggested Answer Hide Answer
Suggested Answer: C

Choice 'c' is correct.

Choices 'a', 'b', and 'd' are incorrect, per the above calculation.


by Margarita at Jan 09, 2025, 11:18 PM

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Beatriz
7 months ago
Price changes don’t affect total revenue in this case.
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Berry
8 months ago
Definitely not A, that’s for sure!
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Ezekiel
8 months ago
Wait, how can that be? Seems counterintuitive.
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Jill
8 months ago
I agree, option D is correct!
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Josue
8 months ago
Total revenue stays the same with unit elastic demand.
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Leonora
9 months ago
I remember discussing how unit elastic means the percentage change in quantity demanded equals the percentage change in price. So, I think D makes the most sense here.
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Donte
9 months ago
I recall something about how total revenue changes with price elasticity, but I'm confused about unit elastic. I might lean towards A, but I'm not confident.
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Stephania
9 months ago
I'm not entirely sure, but I feel like we practiced a question where an increase in price with unit elastic demand didn't change total revenue. Could it be D?
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Hershel
9 months ago
I think I remember that if demand is unit elastic, total revenue stays the same when price changes. So, maybe it's D?
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Gearldine
9 months ago
I'm pretty confident on this one. If demand is unit elastic, an increase in price will lead to a decline in quantity that exactly offsets the price increase, so total revenue stays the same. Option D is the correct answer.
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Nicholle
9 months ago
I'm a little confused on this one. I know unit elastic demand means a 1% change in price leads to a 1% change in quantity, but I'm not sure how that affects total revenue. Let me think this through carefully.
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Ranee
9 months ago
Okay, I think I've got this. If demand is unit elastic, an increase in price will result in a decline in the quantity demanded that is exactly proportional to the increase in price, so total revenue stays the same.
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Flo
9 months ago
Hmm, this question seems straightforward, but I want to make sure I understand the concept of unit elastic demand before answering.
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Charisse
1 year ago
Wait, is unit elastic demand the same as perfectly elastic demand? I feel like I'm missing something here. Someone please help me out!
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Mica
1 year ago
Oh man, I'm so confused. Is unit elastic demand the same as inelastic demand? I can never remember which one is which. Guess I'll just go with C and hope for the best!
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Talia
1 year ago
Hmm, this is a tricky one. I'm going to have to go with option D - an increase in price will have no effect on total revenue. That's what unit elastic demand means, right?
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Elke
1 year ago
I agree, let's stick with option D for unit elastic demand.
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Dottie
1 year ago
I see your point, but I still think option D is the best choice here.
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Hillary
1 year ago
But what about option A? Wouldn't an increase in price lead to a decline in total revenue?
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Florinda
1 year ago
I think you're right, option D makes sense for unit elastic demand.
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Sharika
1 year ago
I think the correct answer is C. If demand is unit elastic, a price increase will actually lead to an increase in total revenue.
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Fanny
1 year ago
Oh, I see. Thanks for clarifying that!
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Herman
1 year ago
Actually, the correct answer is A. An increase in price will result in a decline in total revenue.
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Levi
1 year ago
I think the correct answer is C. If demand is unit elastic, a price increase will actually lead to an increase in total revenue.
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Glory
1 year ago
I agree with Amie. When demand is unit elastic, consumers are sensitive to price changes, so increasing the price will lead to a decrease in total revenue.
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Michell
1 year ago
I'm pretty sure the answer is B. If demand is unit elastic, a price increase will result in a less-than-proportional decrease in quantity demanded, so total revenue should decline.
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Rana
1 year ago
Exactly, it's all about that balance between price and quantity demanded.
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Rossana
1 year ago
So, total revenue would go down even though the price went up.
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Nieves
1 year ago
Yeah, if demand is unit elastic, a price increase should lead to a smaller decrease in quantity demanded.
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Beth
1 year ago
Yeah, if demand is unit elastic, a price increase should lead to a decrease in quantity demanded that is less than the increase in price.
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Trina
1 year ago
I think you're right, B sounds like the correct answer.
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Bettina
1 year ago
I think you're right, B sounds like the correct answer.
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Amie
1 year ago
I think an increase in price will result in a decline in total revenue.
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Theron
1 year ago
If demand is unit elastic, what do you think will happen if there's an increase in price?
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