Question

Price and quantity demanded - Malabar Price [$] 10 11.50 Quantity demanded [lb] 500 300 Input area Price Elasticity of Demand (PED) = abs ( Fill in the values in the Price Elasticity of Demand equation, which states that Price Elasticity of Demand equals absolute value of the numerator divided by the denominator.

Answer 1

To calculate Price Elasticity of Demand, one must determine the percentage changes in quantity demanded and price, and then divide the former by the latter, considering the absolute value.

Step-by-step explanation:

The subject of the question is concerned with calculating the Price Elasticity of Demand (PED), which measures the responsiveness of the quantity demanded to a change in price. The PED can be calculated using a specific formula: PED = absolute value of (% change in quantity demanded / % change in price). To solve for PED using the provided information:

1. First, calculate the percentage change in quantity demanded: ((300 - 500) / ((300 + 500) / 2)) x 100.
2. Then, calculate the percentage change in price: ((11.50 - 10) / ((11.50 + 10) / 2)) x 100.
3. Now calculate the PED: abs(percentage change in quantity / percentage change in price).

As the demand curve is typically downward sloping, PED is a negative value, but we consider it in absolute terms for practical purposes.