State whether the following statements are TRUE and FALSE.

4. Unitary Elastic Demand rarely occurs in practice.

Answer:

TRUE

Unitary elasticity implies that a certain percentage increase in price is offset by equal percentage decrease in demand. If price of a good rises by two times, then the demand for the good gets halved. Similarly, a percentage decrease in price is offset by an equal percentage increase in demand for the good. Such an exact behaviour rarely occurs in practice.