Question

Demand contracts from 500 to 400 when price rises from $40 to $42

Answer 1

$PED= \frac{\Delta Q}{\Delta P}×\frac {P}{Q}$

$= \frac{(400-500)}{(42-40)}×\frac {P}{Q}$

$= \frac{-100}{2}×\frac {40}{500}= -4$