If the price of a good increases from ₹20 to ₹25 and the quantity demanded decreases from 100 units to 80 units, calculate the price elasticity of demand.

0.8

The correct answer is Option (3) → 0.8

Price Elasticity of Demand (PED)=% change in quantity demanded​ / % change in price

Percentage change in quantity demanded​ = [(100- 80) /100] * 100 = 20%

Percentage Change in Price = [ (25-20) /20] * 100 = 25 %

Price Elasticity of Demand (PED)= =20 % /25% = 0.8