Agree or disagree with this statements and explain:
If the demand for a good has unitary elasticity, or elasticity
is -1, it is always true that an increase in its price will lead to
more revenues for sellers taken as a whole.
I disagree with this statement. Unitary elasticity, or an elasticity of -1, means that the percentage change in quantity demanded is equal to the percentage change in price. It implies that the demand for the good is perfectly elastic, which means that any increase or decrease in price will result in a proportionate change in quantity demanded.
In this scenario, if the price increases, the quantity demanded will decrease by the same percentage. As a result, total revenue (price multiplied by quantity) remains the same. Sellers will not generate more revenue from an increase in price because the decrease in quantity demanded offsets the price increase.
To understand this concept further, you can calculate the price elasticity of demand using the following formula:
Elasticity = (Percentage change in quantity demanded) / (Percentage change in price)
If the elasticity coefficient is equal to -1, it indicates unitary elasticity and implies that total revenue will not change when price changes.