1. **State the problem:** John usually buys 10 packets of Tayto crisps at $1 each. After a price increase, he buys only 5 packets. Given the price elasticity of demand (PED) is -1.2, find the new price of the crisps. 2. **Formula and explanation:** The price elasticity of demand is given by: $$\text{PED} = \frac{\% \text{ change in quantity demanded}}{\% \text{ change in price}}$$ We can rearrange this to find the percentage change in price: $$\% \text{ change in price} = \frac{\% \text{ change in quantity demanded}}{\text{PED}}$$ 3. **Calculate percentage change in quantity demanded:** Initial quantity $Q_i = 10$ Final quantity $Q_f = 5$ $$\% \text{ change in quantity demanded} = \frac{Q_f - Q_i}{Q_i} \times 100 = \frac{5 - 10}{10} \times 100 = -50\%$$ 4. **Calculate percentage change in price:** $$\% \text{ change in price} = \frac{-50\%}{-1.2} = 41.67\%$$ 5. **Calculate new price:** Initial price $P_i = 1$ $$P_f = P_i \times \left(1 + \frac{41.67}{100}\right) = 1 \times 1.4167 = 1.4167$$ 6. **Final answer:** The new price of the crisps is approximately **1.42**.