Question 6
MediumOriginal questionThe price elasticity of demand for a good is 2. If its price falls by 10%, its quantity demanded will
Show the answer and explanation
CorrectNot quiteAnswer C
Correct answer: C
Explanation
% change in quantity = eₚ × % change in price = 2 × 10% = 20%.
A price fall raises the quantity demanded, so it rises by 20%.
- Concept
- Using elasticity to predict quantity
- Typical timeTypical
- 70 s
- Your timeYours
- —
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