What will be the % change in quantity demanded, when, the price elasticity of demand is 2 and the % change in price is equal to 5?
Answer & explanation
Correct answer: option 2
Price elasticity of demand (Ped) = \(\frac{\text {percentage change in quantity demanded for the good }}{\text {percentage change in price for the good }}\)
2 = \(\frac{\text {% change in quantity demanded for the good }}{\text { 5%}}\)
% change in quantity demanded for the good = 2 * 5%
% change in quantity demanded for the good = 10%