Equal areas indicate unit elastic demand

Steps:

• Price halves from P1 to P2, so %ΔP = -50%.
• Area OMQ equals area OPQ, implying total revenue unchanged (initial revenue = P1 × Q1; new = P2 × Q2).
• For revenue to stay constant with price halving, quantity must double (Q2 = 2 × Q1), so %ΔQ = +100%.
• PED = (%ΔQ / %ΔP) = 100% / (-50%) = -1.

Why A is correct:

• PED = -1 when equal areas show revenue invariance, per the unit elasticity definition where %ΔQ = -%ΔP.

Why the others are wrong:

• B: -0.5 implies %ΔQ = +25%, so Q2 = 1.25 × Q1 and revenue falls.
• C: 0 means no quantity change, so areas unequal and revenue halves.
• D: Infinity requires horizontal demand, but price change with equal areas contradicts flat curve.

Final answer: A