Answer: The quantity demanded is decreased by 20%.
Step-by-step explanation:
Since we have given that
Price elasticity of demand = 2
Percentage change in price = (+)10%
We need to find the percentage change in quantity demanded.
As we know the formula:
[tex]e_D=\dfrac{\text{\% change in quantity demanded}}{\text{\% change in price}}\\\\2=\dfrac{x}{10}\\\\x=20\%[/tex]
As we know that there is inverse relationship between the price and quantity demanded.
Hence, the quantity demanded is decreased by 20%.
