If the price of sandals increases by 10 percent and the quantity demanded falls by 20 percent,then the price elasticity of demand in absolute value is
A).2.
B)2.
C)20 percent.
D)2 percent.

Question

Quizplus · Accepted Answer

The formula for price elasticity of demand is (% change in quantity demanded) / (% change in price). Given that the price has increased by 10% and the quantity demanded has fallen by 20%, we can plug these values into the formula:

% change in quantity demanded = (20%)/100% = 0.2
% change in price = (10%)/100% = 0.1

So, the price elasticity of demand in absolute value is:

(0.2)/(0.1) = 2

If the Price of Sandals Increases by 10 Percent and the Quantity