Question

b. Calculate the coefficient of price elasticity of demand from the given data for point A to B.

Point Quantity Price

A 4 7

B 3 8

Answer 1

The formula for the coefficient of PED is:

PED=$\frac{ (percentage)change in quantity demanded}{(percentage)change in price}$

%change in quantity demanded =3-4=-1

$=\frac{-1}{3}×$ 100%=-33.3%

%Change in price =8-7=1

$=\frac{1}{8}×$ 100%=12.5%

$\therefore$ Coefficient of PED=$\frac{-33.3}{12.55}$

=$-2.7$

=$2.7$