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24 April, 23:16

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

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  1. 24 April, 23:27
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    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.
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