A Good Has a Price Elasticity of Demand Equal to 2

question 71

Multiple Choice

A good has a price elasticity of demand equal to 2. If new imports lower its price from $1.20 to $0.80, the percentage change in quantity demanded will be

• A)an increase of 80 percent.
• B)a decrease of 80 percent.
• C)a decrease of 40 percent.
• D)an increase of 2 percent.
• E)an increase of 40 percent.

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