Walmart is thinking about offering a 25% discount on a brand of shoes. If the elasticity of demand is two, then the discount would increase sales by: A. 50%. B. 2%. C. 200%. D. 25%.

A. 50%.

Explanation:

The price elasticity of demand formula is:

PED = Change in quantity demanded / change in price

plugging the amounts into the formula we obtain:

2 = X / 25%

Now, simply solve for X:

2 x 25% = X

50% = X

Thus, the total quantity demanded would increase by 50%