Answer:
Price elasticity of demand = 0.33%
Explanation:
A price elasticity of demand can be defined as a measure of the responsiveness of the quantity of a product demanded with respect to a change in price of the product, all things being equal.
Mathematically, the price elasticity of demand is given by the formula;
<u>Given the following data;</u>
Old price = $10
New price = $12
Old quantity demanded = 100
New quantity demanded = 40
To find the price elasticity of demand, we would determine the percentage change in price and demand.
<em>Percentage change in price = 20%</em>
<em>Percentage change in demand = 60%</em>
Now, we can find the price elasticity of demand;
Substituting into the equation, we have;
<em>Price elasticity of demand = 0.33%</em>