Work out the PED for each, and comment on your

Ответ:

msab3253

18.03.2022

Mathematics

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)× $\frac{Initial Price}{Initial Quantity demanded}$

Now,

Change in quantity demanded = $\frac{6 - 4}{180 - 200}$ = $\frac{2}{20} = \frac{1}{10}$

⇒PED = $\frac{1}{10}$ × $\frac{200}{4}$ = 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 = $\frac{1000000 - 950000}{1.10- 1}$ = $\frac{50000}{0.10} = 500000$

⇒PED = 500000 × $\frac{1}{1000000}$ = 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 = $\frac{2.2 - 2}{30 - 1.50}$ = $\frac{0.2}{28.50} = \frac{20}{2850} = \frac{2}{285}$

⇒PED = $\frac{2}{285}$ × $\frac{1.50}{2}$ = $\frac{15}{2850}$ = $\frac{1}{190}$ = 0.005

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