Question

Calculative PED, when price of good decreases to one fourth Of original price and demand increases 3 times.

Answer 1

p1=p1

p2=1/4th of p1

=p1/4

%change in price=((p1/4)-p1 /p1) *100

=-3/4 *100

=-75%

qd1=q1

qd2=3q1

%change in qd= 3q1-q1 /q1 *100

=200%

Price elasticity of demand= %change in qd/%change in price

=- 200/75

=-2.67%