Imagine that the price elasticity of demand for non-mandatory veterinary vaccines for your dog is unit elastic. Initially, prices were at $100 dollars per vaccination and 1,000 dogs were vaccinated in Fort Collins. Recently, the price increased by 20% to $120 dollar per vaccination. What is the new revenue to for the veterinary clinics?

a. $120,000

b. $50,000

c. $100,000

d. $80,000

Question

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1 April, 21:57

Imagine that the price elasticity of demand for non-mandatory veterinary vaccines for your dog is unit elastic. Initially, prices were at $100 dollars per vaccination and 1,000 dogs were vaccinated in Fort Collins. Recently, the price increased by 20% to $120 dollar per vaccination. What is the new revenue to for the veterinary clinics?

a. $120,000

b. $50,000

c. $100,000

d. $80,000

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Answers (1)

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Curly · Answer 1

c. $100,000

Explanation:

Since in the question it is given that the price elasticity of demand is unit elastic that means it is equal to one plus the total revenue do not changed if there is a change in price and the quantity demanded

So in this case, the new revenue is

New revenue = Price * Quantity

= $100 * $1,000

= $100,000

Hence, the correct option is c.