When the demand curve for a good is unit elastic, raising the price of the good by 25 percent will change the revenue of the firm by: A

Total revenue received from sale of a good is calculated by multiplying the price of the good by its quantity sold.

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The law of demand states that as price of a good falls, the quantity demanded or sold of the good increases.

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The price elasticity of demand measures the quantity demanded of a good to a change in its price, when all other influences on buying plans remain the same.

• When the demand for a good is elastic, a 1% price cut increases the quantity of good demanded and sold by more than 1%, and the total revenues received from the sales increases.
• When the demand for a good is unit elastic, a 1% price cut increases the quantity of good demanded and sold by 1%, and the total revenues received from the sales does not change.
• When the demand for a good is inelastic, a 1% price cut increases the quantity of good demanded and sold by less than 1%, and the total revenues received from the sales decreases.

Thus, when the demand curve for a good is unit elastic, the total revenues received from the sales does not change. Hence raising the price of the good by 25 percent will not change the revenue of the firm, and hence the change in revenue of the firm will be 0 percent.

Thus, option ( d ) is the correct answer.