A Good Has a Price Elasticity of Demand Equal to 2

Multiple Choice

A good has a price elasticity of demand equal to 2. If new imports lower its price from $1.20 to $0.80, the percentage change in quantity demanded will be

A) an increase of 80 percent.
B) a decrease of 80 percent.
C) a decrease of 40 percent.
D) an increase of 2 percent.
E) an increase of 40 percent.