Given:
Elasticity of Demand = 2
Decrease in price = 1%
To find:
Change in quantity demanded
Solution:
The percentage change in quantity demanded is the mathematical product of the percentage change in price and elasticity of demand. This can be mathematically represented as,
[tex]\% \text{ change in quantity demanded }=\% \text{ change in price }\times\text{Elasticity of demand }\\\\ \Rightarrow \% \text{ change in quantity demanded }=1\times2\rightarrow 2\%[/tex]
Since, there is a decrease in price, the demand for the product will increase. Therefore, we can conclude that there will be 2% increase in quantity demanded
