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Homework answers / question archive / If the quantity demanded of the meat pies decreases by 3% when the price of the meat pie falls by 10%, what is the price elasticity of demand for meat pies?
If the quantity demanded of the meat pies decreases by 3% when the price of the meat pie falls by 10%, what is the price elasticity of demand for meat pies?
Price elasticity of demand (PED) = %change in quantity demanded/%change in price
But;
%change in quantity demanded = 3% (when calculating PED will be -3 because the demand decreased)
%change in price = 10%
Hence, PED = -3/10 = -0.3
Price elasticity of demand for meat pies = -0.3
