If demand price elasticity measures 2, this implies that consumers would:
A) buy twice as much of the product if the price drops 10 per cent.
B) require a 2 per cent drop in price to increase their purchases by 1 per cent.
C) buy 2 per cent more of the product in response to a 1 per cent drop in price.
D) require at least a $2 increase in price before showing any response to the price increase.

Question

Quizplus · Accepted Answer

A demand price elasticity of 2 means that if the price drops by 1%, the quantity demanded will increase by 2%. Thus, if the price drops by 10%, the quantity demanded will increase by 20% (10% x 2). Therefore, consumers would buy 2% more of the product in response to a 1% drop in price.

If Demand Price Elasticity Measures 2, This Implies That Consumers