If the price elasticity of demand for chicken is 2,a 20% decrease in the price of chicken will lead to a:
A)10% decrease in the quantity demanded of chicken.
B)10% increase in the quantity demanded of chicken.
C)40% decrease in the quantity demanded of chicken.
D)40% increase in the quantity demanded of chicken.

Question

Quizplus · Accepted Answer

Price elasticity of demand is the percentage change in quantity demanded divided by the percent change in price,here % change in quantity/20 = 2.The percent change in quantity must be 40.A decrease in price will increase quantity demanded,so the change is an increase of 40%.

If the Price Elasticity of Demand for Chicken Is 2,a