Question

if the ratio of change in quantity demanded to original quantity is 0.5 and elasticity of demand is -1.25, calculate the per cent change in price

Answer 1

The price increases from $20 to $22. Therefore % change = 2/20 = 0.1 (10%)

0.1 = 10% (0.1 *100)

Quantity fell by 13/100 = – 0.13 (13%)

Therefore PED = 13/-10

Therefore PED = -1.3