Answer:
Option A is correct
Price elasticity of demand =0.6
Explanation:
<em>Price elasticity of demand (PED) is the degree of responsiveness of demand to a change in price. </em>
<em>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 </em>
PED is computed as follows:
PED = % change in quantity /% change in Price
% change in demand = (100-80)/100 × 100 = 20%
% change in price =(0.75-1)/0.75 × 100 = 33.33%
PED = 20%/33.33% = 0.600
Price elasticity of demand =0.6
