Question

if the quanity demanded of soda decreases by 5 percent when the price of soda rises by 100 percent what is the price elasticity of demand for soda

Answer 1

Price elasticity of demand is calculated as the ratio of change in demand to the ratio of change in price. So if the demand changes -5% when the price changes 100%, the PED = -5% / 100% = -0.05. Most good have a PED < 0, since demand typically decreases when the price is increased.