If the prices of a commodity increases from N8.00 to N10.00 and the demand decreases from 100 to 80…

Analyze the question: We need the price elasticity of demand (PED) when price rises from N8 to N10 and quantity demanded falls from 100 to 80.

Concept: PED = % change in quantity demanded ÷ % change in price

(Using the original values as the base, which is the standard approach in Nigerian exams.)

Solution:

• Change in quantity = 80 − 100 = −20
• % change in quantity = (−20 ÷ 100) × 100 = −20%

• Change in price = 10 − 8 = 2
• % change in price = (2 ÷ 8) × 100 = 25%

PED = −20% ÷ 25% = −0.8

Ignoring the negative sign (demand curves slope downward, so we take the absolute value):

PED = 0.8

Since 0.8 < 1, demand is inelastic.

Check with the midpoint method (for reference):

• % change in Q = 20 ÷ 90 ≈ 22.2%
• % change in P = 2 ÷ 9 ≈ 22.2%
• PED = 1.0

This would give option C, but the midpoint method is not the standard one used in NECO. With the usual original-value method, the answer is 0.

Answer: B. 0.8

Tip: Always use the formula PED = (ΔQ/Q) ÷ (ΔP/P), with the original (first) values as the base unless the question says "average" or "midpoint". Also remember: PED < 1 means inelastic, PED > 1 means elastic, and PED = 1 means unitary.