JAMB Economics 2024 Paper

Concept:Price elasticity of demand measures how much quantity demanded responds to a change in price.Explanation:Calculate the percentage change in quantity demanded: $\frac{80 - 100}{100} \times 100 = -20\%$. This is a decrease in quantity demanded. Calculate the percentage change in price: $\frac{10 - 8}{8} \times 100 = 25\%$. This is an increase in price. Now apply the elasticity formula: $\text{PED} = \frac{\text{Percentage change in quantity demanded}}{\text{Percentage change in price}} = \frac{-20}{25} = -0.8$. Elasticity is often reported as an absolute value, so we take $0.8$. Since demand changes proportionally less than price, the commodity has inelastic demand.Answer:B. $0.8$