# Pricing ACCA F5 lecture, Part 2a

1. says

Good Day John,

Hope all is well. Glad to be back with you.

So…

I am doing Example 3 in Chapter 7 (Price Elasticity of Demand) and I am a bit confused.

The PED is = % change in demand / % change in price

((D2- D1)/D1))*100 ((200-100)/100))*100 = 100
————————– ——————————– ——- = 30.12
((P2- P1)/P1))*100 ((16 – 15.5)/15.5))*100 = 3.32

Am I correct?

• says

Not quite.

The top bit is correct, but for the demand to increase the price has to fall from 16 to 15.5, and so the bottom of the formula should be (15.5-16)/16.

The answers to all of the examples are at the back of the Lecture Notes (see the contents page)

• says

Or so the demand increases but the price decreases and so the formula would change to the bottom. Got it.Thanks

2. says

Sorry for using this forum, but if possible can you guys change the VIMEO player or uploader to youtube. I have been experiencing a tough time in watching the videos in this player for the past 3 weeks, but when it is the ones uploaded in youtube i don’t have problems. I also viewed the technical help you offer and realized all my players are up to date, and the network has a good strength.

• says

Sorry, if you can watch YouTube videos, than Vimeo should all work.
You don’t even mention what browser or device you are using.. Or what country

YouTube js blocked in far more countries than Vimeo, and we won’t change to YouTube im afraid

• says

Thanks for the reply. Am using Adobe Flash player (updated) and also using google crome (updated). Since you are not going to change is there any other option.

3. says

I am totally confused …….during the formula when he arrives at – 1 = 0 -2500b
how on earth did he manage to do 1/2500 ? when they are minus numbers ?

• says

‘He’ is me!!

If -1 = -2500b
then divide both sides by -2500, and 1/2500 = b

(You should know from school that dividing a negative number by a negative number results in a positive number)

• says

I wish there was a like button

4. says

If we start from 16 and demand of 100, then changing to 15.5 means that demand goes up from 100 to 200 – a percentage change of (200-100)/100 = 100%

Price goes from 16 to 15.5 which is a percentage change if (16 – 15.5)/15 = 3.33%

The formulae you wrote were wrong. It should be P2 – P1 / P1; and D2 – D1 / D1

5. says

hello sir, i am a bit confused with example 3 i used the formula
% change in price=(P1-P2)/P2*100
% change in demand=(Q2-Q1)/Q2*100

when i am applying this formula to the question example 3 i am getting the answer as 16 for the first one and 7.25 for the second one. And behind the book its different answers which do not match mine. i am very confused sir please reply

• says

I am not sure what to answer, because the solution at the back of the notes shows the workings.

You do not say how you managed to arrive at 16 and 7.25.

If you say how your workings were different from the answer then I will try and explain where you have gone wrong.

• says

P1 is 16 P2 15.5 Q1 100 Q2 200

QD%= (200-100)/200*100=50%
PRICE%= (16-15.5)/15.5*100=3.225%

So the formula applies as PED=%QD / %PRICE
50/3.225= 16.