A price elasticity of demand of 2 means that a 10 percent increase in price will result in a
A)2 percent decrease in quantity demanded.
B)20 percent decrease in quantity demanded.
C)5 percent decrease in quantity demanded.
D)2 percent increase in quantity demanded.
E)20 percent increase in quantity demanded.

Question

Quizplus · Accepted Answer

A price elasticity of demand of 2 means that a 1% increase in price will result in a 2% decrease in quantity demanded. Therefore, a 10% increase in price will result in a 20% decrease in quantity demanded.

A Price Elasticity of Demand of 2 Means That a 10