Final answer:
The price elasticity of demand for spinach is -0.6, indicating an inelastic demand. The significance of this value is that it suggests spinach is a necessity or essential good.
Step-by-step explanation:
The price elasticity of demand (PED) measures how responsive the quantity demanded of a good is to a change in price. It is calculated as the percentage change in quantity demanded divided by the percentage change in price.
To calculate the price elasticity of demand for spinach, we can use the following formula:
PED = (percentage change in quantity demanded)/(percentage change in price)
In this case, the percentage change in price is 1.00 - 0.50 = 0.50 and the percentage change in quantity demanded is 400 - 1000 = -600.
Using the formula, PED = (-600/1000)/(0.50/0.50) = -0.6/1 = -0.6.
Since the price elasticity of demand is negative and less than 1, we can conclude that spinach has an inelastic demand. This means that the quantity demanded is not very responsive to changes in price.
In the context of the price change due to the impact of Typhoon on Zhuhai, the negative price elasticity indicates that the increase in price led to a relatively smaller decrease in quantity demanded. This suggests that spinach is a necessity or essential good, where consumers are willing to pay more for it even when the price increases.
Therefore, the significance of the price elasticity value in this context is that it helps us understand the responsiveness of quantity demanded to a price change, and in this case, it indicates that spinach has an inelastic demand.