ACCA · Question 19 · Decision-making techniques
Section B - Case 1: AeroDrone Tech
AeroDrone Tech is an agricultural technology startup developing the 'AgriScout', a drone designed to monitor crop health. Market research indicates that large-scale farms would be willing to pay $1,200 for such a drone. AeroDrone's investors require a profit margin of 20% on the selling price. The current estimated production cost of the AgriScout is $1,050.
AeroDrone's marketing team estimates that at a price of $1,200, demand will be 5,000 units. If the price is increased to $1,300, demand will fall to 4,000 units.
What is the Price Elasticity of Demand (PED) for the AgriScout? (Use the basic PED formula: % change in quantity / % change in price)
Answer options:
-0.42
-2.4
-1.2
-4.0
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