1. **Problem:** Calculate the price elasticity of demand when price decreases from 9 to 7. 2. **Formula:** Price elasticity of demand (PED) is given by: $$\text{PED} = \frac{\% \text{ change in quantity demanded}}{\% \text{ change in price}} = \frac{\frac{Q_2 - Q_1}{Q_1}}{\frac{P_2 - P_1}{P_1}}$$ 3. **Given data:** - Initial price $P_1 = 9$ - New price $P_2 = 7$ - Quantity demanded at $P_1$, $Q_1 = 40$ - Quantity demanded at $P_2$, $Q_2 = 60$ 4. **Calculate percentage changes:** - Change in quantity demanded: $$\frac{Q_2 - Q_1}{Q_1} = \frac{60 - 40}{40} = \frac{20}{40} = 0.5$$ - Change in price: $$\frac{P_2 - P_1}{P_1} = \frac{7 - 9}{9} = \frac{-2}{9} \approx -0.2222$$ 5. **Calculate PED:** $$\text{PED} = \frac{0.5}{-0.2222} = -2.25$$ 6. **Interpretation:** The negative sign indicates the inverse relationship between price and quantity demanded. The absolute value is $2.25$, which means demand is elastic. 7. **Answer:** The price elasticity of demand when price decreases from 9 to 7 is approximately **2.27** (closest to given options). **Final answer:** 2.27