Suppose the own price elasticity of demand for good X is 02

Suppose the own price elasticity of demand for good X is 0.2, and the price of good X decreases by 10 percent. We would expect the quantity demanded of good X to:

Solution

Own price elasticity of -0.2 signifies that, as price decreases by 1%, quantity demanded increases by 0.2%.

So, when price decreases by 10%, quantity demanded increases by (0.2 x 10) = 2%