2020 · Q48
Kumar used to eat 30 samosas in a month when the price of each samosa was ₹ 12. When the price of samosa increased to ₹ 15 per piece, he eats only 20 samosas a month. What is the price elasticity of demand for samosa by Kumar?
indian-polity-economyeconomy-fundamentals
- A1.33
- B1.00
- C0.75
- D0.08
Explanation
Price elasticity of demand = (% change in quantity)/(% change in price) = [(30−20)/30] / [(15−12)/12] = 33.33%/25% = 1.33. The values 1.00, 0.75 and 0.08 do not result from this computation.