Find the value of price elasticity of demand of a good whose demand decreases by 20% for an increase in its price of 10%.

2   

Price elasticity of demand measures the degree of responsiveness of the quantity demanded of a commodity to the change in price of the good.

It is measured as: P_ed =  \(\frac{\text {% change in quantity demanded}}{\text {% change in price }}\)

P_ed =  \(\frac{\text {20%}}{\text {10% }}\)

P_ed =  \(\frac{\text {2}}{\text {1 }}\)

P_ed = 2