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If the price elasticity of demand is 1.8 then a 30 percent decrease in the price of the good will lead to a _______ percent increase in the quantity demanded.

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Answer:

The answer is 54percent

Step-by-step explanation:

Elasticity is a measure of how sensitive one variable is to any variable. It is expressed as the ratio of percentage changes in variables.

That is; %change in quantity demanded/%change in price.

This calculation shows how sensitive quantity demanded is to a change in price.

In the question, price elasticity of demand is 1.8

30 percent decrease in price

Therefore, the quantity demanded will increase by 30percent x 1.8

=54percent

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