Question

As the price of samosas (a kind of food in india) was raised from 2 to 3 rupees (indian currency), their quantity demanded fell from 15,000 to 12,000. rounding to the nearest tenth, the elasticity of demand of samosas is:

Answer 1

Answer: Elasticity of demand of samosas is 0.6

Step-by-step explanation:

Price elasticity of demand measures the responsiveness of quantity demanded to a change in the price of the good. It can be measured using the mid-point method,

`e=(Q2 -Q1)/((Q 1 + Q2)/(2) ) * ((P1+P2)/(2) )/(P2 - P1)`

`e=(12,000 - 15,000)/((15,000 + 12,000)/(2) ) * ((2+3)/(2) )/(3 - 2)`

`e=(- 3,000)/(13,500) * (2.5)/(1)`

`e= 0.22*2.5 = 0.5555`

Therefore, elasticity of demand is 0.6