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Tricky pizzle .. If the elasticity of demand = -2, a 5% increase in the price will cause a(?

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If the elasticity of demand = -2, a 5% increase in the price will cause a(n) _______.

answers

0.8% drop in the quantity demanded

10% drop in the quantity demanded

10% drop in the quantity supplied

1.0% drop in the quantity demanded

I thought its 10% drop.. but its wrong.. any help and hint is appreciated.

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  1. First solution (standard):

    ΔQ%/ΔP%=-2

    ΔQ%= -2ΔP%

    ΔQ%=-2 * 5=-10%

    Answ: Quantity demanded will drop for 10%

    Second solution - you should take into account that with rise in price elasticity is increasing toward -∞

    So Quantity demanded can drop more than for 10%.

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