Answer
b. the sale of 125 percent more radios than before.
Explanation:
Price elasticity of demand(PED) is the degree of responsiveness of demand to a change in price. Where a percentage change in price produces a more than a proportional change in quantity, we say the product is price elastic. On the other hand, where a change in price produces a less than a proportional change in quantity demand, then demand is price inelastic
PED is computed as follows:
PED = % change in quantity /% change in Price
2.5 = y/50
y= 2.5 × 50
y = 125
y= 125%
From the above, we can see than an increase in price by 50% will lead to an additional demand in cellphone of 125% more than before.
The correct answer is
b. the sale of 125 percent more radios than before.
