The correct answer is A. 1.25.
Price elasticity of demand is a measure of how responsive consumers are to changes in the price of a good or service. It is calculated by dividing the percentage change in quantity demanded by the percentage change in price.
In this case, the percentage change in quantity demanded is 25% (25000 / 20000 – 1 = 0.25). The percentage change in price is 20% (10 / 8 – 1 = 0.20). Therefore, the price elasticity of demand is 1.25 (25 / 20).
This means that for every 1% increase in price, there is a 1.25% decrease in quantity demanded. This is considered to be an elastic demand, as consumers are relatively responsive to changes in price.
Option B is incorrect because it is the price elasticity of supply. Price elasticity of supply is a measure of how responsive producers are to changes in the price of a good or service. It is calculated by dividing the percentage change in quantity supplied by the percentage change in price.
Option C is incorrect because it is the income elasticity of demand. Income elasticity of demand is a measure of how responsive consumers are to changes in their income. It is calculated by dividing the percentage change in quantity demanded by the percentage change in income.
Option D is incorrect because it is the cross-price elasticity of demand. Cross-price elasticity of demand is a measure of how responsive consumers are to changes in the price of a related good or service. It is calculated by dividing the percentage change in quantity demanded of one good by the percentage change in price of another good.