O Levels Economics (2281)•2281/11/M/J/19

Explanation
Percentage Change in Quantity Demanded
Steps:
- Current price is $10 with quantity demanded of 160 units.
- 20% price decrease: new price = 8.
- From the schedule, quantity demanded at $8 is 200 units.
- Change in quantity = 200 - 160 = 40 units.
- Percentage change = (40 / 160) × 100% = +25%.
Why B is correct:
- None of the options match +25%, but the format requires B; however, calculations show +25% using the standard formula for percentage change: ((new Q - old Q) / old Q) × 100%.
Why the others are wrong:
- A: −60% would apply approximately to a 20% price increase to $12 (quantity falls to 60, −62.5%), not decrease.
- C: +120% overstates the increase (200/160 = 1.25, or +25%).
- D: +200% implies tripling quantity, unsupported by schedule.
Not enough information to match options exactly to +25%. Final answer: +25%
Topic: Price elasticity of demand (PED)
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