If price elasticity of demand is 2.0, this implies that consumers would
A) buy twice as much of the good if price falls by 10 percent
B) require a 2 percent cut in price to raise quantity demanded of the good by 1 percent
C) buy 2 percent more of the good in response to a 1 percent cut in price
D) require at least a $2 increase in price before showing any response to the price increase
E) buy twice as much of the good if the price drops 1 percent

Question

Quizplus · Accepted Answer

Price elasticity of demand measures how much the quantity demanded of a good responds to a change in the price of that good, calculated as the percentage change in quantity demanded divided by the percentage change in price. A price elasticity of 2.0 means that for a 1 percent decrease in price, the quantity demanded increases by 2 percent, which matches option C.

If Price Elasticity of Demand Is 2