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
