Total Expenditure Constant Implies Unitary Price Elasticity

Steps:

• Total expenditure = price × quantity demanded.
• If the diagram shows total expenditure constant as price changes, quantity adjusts proportionally.
• This proportional change means |%ΔQ / %ΔP| = 1.
• Thus, price elasticity of demand is unitary.

Why D is correct:

• Unitary price elasticity occurs when total expenditure remains unchanged with price variations, per the formula E_p = (%ΔQ / %ΔP) = -1 (in absolute value).

Why the others are wrong:

• A: Income elasticity zero implies quantity unchanged with income; unrelated to price-expenditure link.
• B: Price elasticity zero means quantity fixed despite price changes, so expenditure varies directly with price.
• C: Income elasticity unity means proportional quantity response to income; diagram concerns price, not income.

Not enough information on diagram to confirm, but standard interpretation points to D.

Final answer: D