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Suppose the quantity demanded of a particular good increases by 30%, and (the absolute value of) the price elasticity of demand of this good is known to be 2. How must the price have changed?a. it increased by 15%b. it decreased by 66%c. it decreased by 15%d. it increased by 66%

Respuesta :

Answer: Option (c) is correct.

Explanation:

Given that,

Quantity demanded increases by = 30%

Price elasticity of demand = 2

Therefore,

Price elasticity of demand = [tex]\frac{Percentage\ change\ in\ quantity\ demanded}{Percentage\ change\ in\ prices}[/tex]

2 = [tex]\frac{30}{Percentage\ change\ in\ prices}[/tex]

Percentage change in prices = [tex]\frac{30}{2}[/tex]

                                                = 15%

Therefore, price of a particular good decreases by 15%.

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