Unitary elasticity refers to a situation in economics where the percentage change in quantity demanded or supplied is exactly equal to the percentage change in price, resulting in a constant total revenue. It is a critical concept for understanding how changes in price affect market equilibrium and revenue generation, particularly in competitive markets.

Unitary Elasticity

Unitary elasticity

percentage change in quantity demanded

Percentage change in quantity supplied

percentage change in price

constant total revenue

Market equilibrium is the state in which market supply and demand balance each other, resulting in stable prices. It occurs when the quantity of goods supplied equals the quantity demanded, eliminating any excess supply or shortage.

market equilibrium

Revenue generation is the process of creating income for a business or organization through various activities, strategies, and channels. It is crucial for sustainability and growth, as it directly impacts profitability and the ability to invest in future opportunities.

revenue generation

Competitive markets are characterized by a large number of buyers and sellers, where no single participant can influence the market price, leading to efficient allocation of resources. In such markets, firms are price takers and goods are typically homogeneous, fostering an environment where consumer welfare is maximized through optimal pricing and output levels.

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