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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Charisse

27 days 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

29 days 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 months 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

2 days ago

I agree, let's stick with option D for unit elastic demand.

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Dottie

10 days ago

I see your point, but I still think option D is the best choice here.

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Hillary

13 days ago

But what about option A? Wouldn't an increase in price lead to a decline in total revenue?

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Florinda

15 days ago

I think you're right, option D makes sense for unit elastic demand.

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Sharika

1 months 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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Herman

3 days ago

Actually, the correct answer is A. An increase in price will result in a decline in total revenue.

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Levi

5 days 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

2 months 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

2 months 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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