AICPA Exam CPA-Business 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:

AAn increase in price will result in a decline in total revenue.

BAn increase in price will result in a decline the quantity demanded that is less than the increase in price.

CAn increase in price will result in an increase in total revenue.

DAn increase in price will have no effect on total revenue.

Show Suggested 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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Glory

8 days 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

8 days 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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Amie

10 days ago

I think an increase in price will result in a decline in total revenue.

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Theron

16 days ago

If demand is unit elastic, what do you think will happen if there's an increase in price?

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