Work out the price elasticity of demand of Coca Cola when the demand rises from 1 million to 2 million following a price decrease of £1.50 to £1.35. Is this price elastic or price inelastic?
Price elasticity of demand = % change in quantity demanded / % change in price
PED = ((2m - 1m)/1m x100) / ((1.35-1.5)/1.5 x100)
PED = 100/-10PED= -10
it is price elastic since PED < -1
NM
Related Economics IB answers
All answers ▸Explain the effect on GDP of an expansionary monetary policy (10)
What are the characteristics of a perfectly competitive market structure?
What is the difference between GDP and GNI and how should I compare them?
Explain two policies governments might use to redistribute income.