If Price Elasticity of Demand for a Good Is 2

question 7

Multiple Choice

If price elasticity of demand for a good is 2.0, this implies that consumers would

• A) buy twice as much of the good if price falls by 10 per cent.
• B) require a 2 per cent cut in price to raise quantity demanded of the good by 1 per cent.
• C) buy 2 per cent more of the good in response to a 1 per cent cut in price.
• D) require at least a €2 increase in price before showing any response to the price increase.