Calculating Price Elasticity of Demand (PED)

Steps:

• Compute percentage change in price: (30 - 20) / 20 × 100% = 50%.
• From the table, determine percentage change in quantity demanded (e.g., from 400 kg to 300 kg): (300 - 400) / 400 × 100% = -25%.
• Apply PED formula: |%ΔQD / %ΔP| = |-25% / 50%| = 0.5.
• PED value of 0.5 indicates inelastic demand.

Why B is correct:

• PED = 0.5 matches the formula |percentage change in quantity demanded / percentage change in price|, confirming inelastic response to the 50% price increase.

Why the others are wrong:

• A: 0.25 understates the elasticity, ignoring the full 25% quantity drop relative to 50% price rise.
• C: 1.0 assumes unit elasticity, but quantity falls less than proportionally to price.
• D: 2.0 implies elastic demand, but quantity change is only half the price change.

Final answer: B