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Homework answers / question archive / What does the term unitary elastic describe?
What does the term unitary elastic describe?
Unitary elastic describes an elastic ratio where the changes measured is equal to one meaning the price is equally elastic and inelastic. If a cookie is bought by 100 people and sold for $1.00 and the price increases to $1.25 causing demand to drop by 25 people, the cookie is unitary elastic as the 25% increase in price causes a 25% decrease in demand or a ratio of 1.