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If a 10 percent decrease in the price of a good leads to a 20 percent increase in the quantity demanded, then what is the price elasticity of demand? Multiple Choice 20 10 0.5 2.

Economics (MindTap Course List)

13th Edition

ISBN:9781337617383

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter19: Elasticity

Section19.1: Elasticity: Part 1

Problem 1ST: On Tuesday, the price and quantity demanded are 7 and 120 units, respectively. Ten days later, the...

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fa 10 percent decrease in the price of a good leads to a 20 percent increase in the quantity demanded, then what is the price elasticity of demand?
Multiple Choice
20
10
2
0.5

Expert Solution

Step 1

Price elasticity of demand measures the responsiveness of quantity demanded for a good due to changes in the own price of the good. When the value of elasticity is greater than 1, demand is considered as elastic. When the value of elasticity is less than 1, demand is considered as inelastic.

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