Respuesta :
Answer:
a.) PED = 5
b.) PED = 5
c.) PED = 0.05
Step-by-step explanation:
Here , PED = Price elasticity of demand
a.)
Given - The price of a smartphone is currently £200, and the quantity demanded is 4m. Next year the price falls to £180 and the quantity demanded rises to 6m.
PED = (Change in quantity demanded)×[tex]\frac{Initial Price}{Initial Quantity demanded}[/tex]
Now,
Change in quantity demanded = [tex]\frac{6 - 4}{180 - 200}[/tex] = [tex]\frac{2}{20} = \frac{1}{10}[/tex]
⇒PED = [tex]\frac{1}{10}[/tex]×[tex]\frac{200}{4}[/tex] = 5
b.)
Given -The price of pens today is £1, and the quantity demanded is 1m. Next year the price rises to £1.10 and the quantity demanded falls to 950,000.
Change in quantity demanded = [tex]\frac{1000000 - 950000}{1.10- 1}[/tex] = [tex]\frac{50000}{0.10} = 500000[/tex]
⇒PED = [tex]500000[/tex]×[tex]\frac{1}{1000000}[/tex] = 5
c.)
Given -The price of a daily newspaper today is £1.50p, and the quantity demanded is 2m. Next year the price falls by 30p and the quantity demanded rises to 2.2m
Change in quantity demanded = [tex]\frac{2.2 - 2}{30 - 1.50}[/tex] = [tex]\frac{0.2}{28.50} = \frac{20}{2850} = \frac{2}{285}[/tex]
⇒PED = [tex]\frac{2}{285}[/tex]×[tex]\frac{1.50}{2}[/tex] = [tex]\frac{15}{2850}[/tex]= [tex]\frac{1}{190}[/tex] = 0.005
