91Ó°ÊÓ

Price elasticity of demand will be elastic when the result is more than 1 and it will be inelastic when the result is less than 1.

The formula for evaluating price elasticity of demand is:

$Priceelasticityofdemand=\frac{\%changeinquantity}{\%changeinprice}$

Given

The quantity of B is 2,800 and C is 2,600

The price of B is 70 and C is 80

$$\begin{gathered} \%changeinquantity=\frac{2,600-2,800}{2,800}×100 \\ =-7.14 \\ \%changeinprice=\frac{80-70}{70}×100 \\ =14.2 \end{gathered}$$

Calculation of price elasticity of demand:

$$\begin{gathered} Priceelasticityofdemand=\frac{\%changeinquantity}{\%changeinprice} \\ =\frac{-7.14}{14.2} \\ =-0.50 \end{gathered}$$

As the price elasticity of demand is -0.50 (less than 1) it is inelastic.

Given

The quantity of D is 2,400 and E is 2,200

The price of D is 90 and E is 100

$$\begin{gathered} \%changeinquantity=\frac{2,200-2,400}{2,400}×100 \\ =-8.33 \\ \%changeinprice=\frac{100-90}{90}×100 \\ =11.11 \end{gathered}$$

Calculation of price elasticity of demand:

$$\begin{gathered} Priceelasticityofdemand=\frac{\%changeinquantity}{\%changeinprice} \\ =\frac{-8.33}{11.11} \\ =-0.74 \end{gathered}$$

As the price elasticity of demand is -0.74 (less than 1) it is inelastic.

Given

The quantity of G is 1,800 and H is 1,600

The price of G is 120 and H is 130

$$\begin{gathered} \%changeinquantity=\frac{1,600-1,800}{1,800}×100 \\ =-11.11 \\ \%changeinprice=\frac{130-120}{120}×100 \\ =8.33 \end{gathered}$$

Calculation of price elasticity of demand:

$$\begin{gathered} Priceelasticityofdemand=\frac{\%changeinquantity}{\%changeinprice} \\ =\frac{-11.11}{8.33} \\ =-1.33 \end{gathered}$$

As the price elasticity of demand is -1.33 (greater than 1) it is elastic.