Answer:
The own price elasticity is 0.28.
The demand for good a is inelastic.
Explanation:
The price elasticity of demand for a product is the change in the quantity demanded of a product due to a change in its price.
When the price of good A increases by 7% the quantity demanded of that product decreases by 2%.
The own price elasticity of demand
= [tex]\frac{change\ in\ quantity\ demanded}{change\ in\ price}[/tex]
= [tex]\frac{2}{7}[/tex]
= 0.28
The elasticity of demand is less than 1, this implies that demand is inelastic.
A greater change in price is leading to a smaller change in quantity demanded.
