Answer:
% change in quantity =34.8%
Explanation:
Price elasticity of demand (PED) is the degree of responsiveness of demand to a change in price.
Where a percentage change in price produces a more than a proportional change in quantity, we say the product is price elastic. On the other hand, where a change in price produces a less than a proportional change in quantity demand, then demand is price inelastic
PED is computed as follows:
PED = % change in quantity /% change in Price
PED = 0.87
% change in Price = 40%
% change in Quantity =?
0.87 = y/40%/
Cross mulitiplying, we have
y = 0.87 × 40 = 34.8
Dividing both sides by 0.87
y = 34.8
% change in quantity = 34.8
% change in quantity =34.8
