Question

Jerome says that he will spend exactly $25 (think sales/revenue) each month on new apps for his mobile device, regardless of the price of apps. Jerome’s demand for apps is a. Perfectly elastic. b. Unit elastic. c. Perfectly inelastic. d. Somewhat inelastic, but not perfectly inelastic.

Answer 1

Option B, unit elastic.

Step-by-step explanation:

The option “b” is correct because as per the expenditure method to calculate the elasticity of demand when the total expenditure (TE) remains the same regardless of the increase or decrease in the price or quantity then the elasticity is equal to one. Thus when elasticity is equal to one this is called the unit elastic demand. thus, option b is right.