if the price of a product increases from R200 to R250 then demand falls from R450 to 300 units. Calculate PED and determine the degree of elasticity​

Price elasticity of demand = 0.5

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;

Given the following data;

Old price = $200

New price = $250

Old quantity demanded = 450

New quantity demanded = 300

To find the price elasticity of demand (PED);

First of all, we would determine the percentage change in price and demand.

Percentage change in price = 25%

Percentage change in demand = 50%

Now, we can find the price elasticity of demand;

Substituting into the formula, we have;

Price elasticity of demand = 0.5



Therefore, the degree of elasticity is said to be inelastic because the price elasticity of demand (PED) is less than 1.

in terms of experimental research, mcdonald’s charging different prices in the two cities relates to

the third answer is correct.