Answer:
Price elasticity of demand,
= 1.63
Explanation:
We know,
Price elasticity of demand,
= ![\frac{Percentage change in Quantity Demanded}{Percentage change in prices}](https://tex.z-dn.net/?f=%5Cfrac%7BPercentage%20change%20in%20Quantity%20Demanded%7D%7BPercentage%20change%20in%20prices%7D)
We will be using mid-point method to calculate the price elasticity.
Here,
Percentage change in Quantity demanded =
× 100
or, Percentage change in Quantity demanded =
× 100
Therefore, % change in Quantity demanded =
× 100 = 88.89%
Again,
Percentage change in price =
× 100
or, Percentage change in price =
× 100
Therefore, Percentage change in price =
× 100 = - 54.55%
Therefore, Price elasticity of demand,
= 88.89% ÷ (- 54.55%) = 1.63
We know, price elasticity is always positive. Therefore, we have to give an absolute value for price elasticity.