The correct answer is 2.4.
The simplest way to define elasticity of demand is by using the following formula:
Elasticity of Demand = Change in Demand / Change in Prices
Then, in our question we have:
Demand Elasticity = 12% / 5% = 2.4
Why is it called elasticity of demand?
An elastic product is one in which demand significantly shifts in reaction to price fluctuations. In other words, the product's demand point has expanded significantly from its earlier point. It is inelastic if the amount purchased fluctuates little when the price of the good or service changes.
What Does elasticity of demand tells us?
It reveals how much the quantity needed alters in response to pricing changes made by the company. The price elasticity of demand explains how the amount sought in the market changes when the price changes if we are evaluating a market demand curve.
Learn more about elasticity of demand: https://brainly.com/question/23301086
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