What will happen to the quantity demanded if the price elasticity of demand is 2 and price increases by 10%?
A)It increases by 10%.
B)It decreases by 5%.
C)It decreases by 20%.
D)It increases by 20%.

Question

Quizplus · Accepted Answer

With a price elasticity of 2, a 10% increase in price will lead to a 20% decrease in the quantity demanded (since elasticity = percentage change in quantity demanded / percentage change in price).

What Will Happen to the Quantity Demanded If the Price