The price of tea in the UK increased from £7.20 per kilo to £8.48 per kilo. Over the same period the quantity of tea purchased fell from 97 million kilos to 76 million kilos. Calculate the price elasticity of demand for tea.
Price elasticity of demand = change in demand / change in price change in price = 7.20 --> 8.48 = 17.78% increasechange in demand = 97 million --> 76 million kilos = 21.6% decrease therefore PED = -21.6/+17.78 = -1.217 = -1.22
WH
Related Economics A Level answers
All answers ▸What conflicts between macroeconomics objectives may occur in an economy?
Assess how important government policies, other than taxation, are to a business when deciding where to locate its operations. (12)
What is the best market structure?
In a perfectly competitive labour market, explain how equilibrium wages are determined by the forces of supply and demand.