Answer :

a) Price elasticity of demand is the degree of responsiveness of demand to change in the price of the commodity. If a proportionate change in demand is more than the change in price demand is said to be elastic, and if the change in demand is less than the change in price the demand is said to be inelastic.

Ed = % change in quantity demanded/ % change in price


b) Ed = % change in quantity demanded/ % change in price


= (-)150-130/150 * 100 / 40


= (-) 30/150* 100 / 40


= (-)20 / 40


= -0.5


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