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8 January, 20:04

Suppose that when the price of a soft drink rises 10%, the quantity demanded of the soft drink falls 5%. Based on this information, what is the approximate absolute price elasticity of demand for soft drink

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  1. 8 January, 23:14
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    0.5

    Explanation:

    The price elasticity of demand (PED) measures how a 1% change in the price of a good or service changes the quantity demanded.

    in this case the PED = - 5% / 10% = - 0.5

    PED is usually measured in absolute terms = 0.5, this means that the demand is price inelastic. A change in the price will result in a smaller proportional change in the quantity demanded.
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