Answer :
a. 9
b. 1
c. 0.25
d. (a)
To calculate Price elasticity of Demand we know,
Pe = percentage change in quantity/ Percentage change in price
Also
Percentage change in quantity Q = [Q2 - Q1 / (Q2+Q1)÷2] x100
Percentage change in price P = [P2 - P1/ (P2 + P1)÷2] x100
Now
a. Pe = 200/22.2 = 9
Q = [0-60/ (0+60)÷2] x100 = -200
P = [5-4/ (5+4)÷2] x100 = 22.2
b. Pe = 40/40 = 1
Q = [240-360/ (240+360)÷2] x100 = -40
P = [3-2/ (3+2)÷2] x100 = 40
c. Pe = 25/100 = 0.25
Q = [420-540/ (420+540)÷2] x100 = -25
P = [1.5-0.5/ (1.5+0.5)÷2] x100 = 100
d. (a) is most elastic because the percentage change in quantity is more than percentage change in price
What is Price Elasticity of Demand?
Price Elasticity of Demand is ratio between of change in quantity and change in price
More elastic
when a product or service's demanded quantity changes by a greater percentage than changes in price it is said to be elastic demand ( e>1)
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