If a 10% decrease in price for a good results in a 20% increase in quantity demanded,the price elasticity of demand is
A)0.50.
B)1.
C)1.5.
D)2.

Question

Quizplus · Accepted Answer

Price elasticity of demand is calculated as the percentage change in quantity demanded divided by the percentage change in price.
In this case, the percentage change in quantity demanded is (20-0)/20 = 1
The percentage change in price is (10)/100 = 0.1
Therefore, the price elasticity of demand is 1/0.1 = 10/1 = 2. So, the correct answer is D).

If a 10% Decrease in Price for a Good Results