As the price of samosas (a triangular pastry 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:
A) 4.
B) 0.6.
C) 1.8.
D) impossible to determine because we don't know the exchange rate of the rupee.

Question

Quizplus · Accepted Answer

The price elasticity of demand is calculated as the percentage change in quantity demanded divided by the percentage change in price. Here, the percentage change in quantity demanded is ((12,000 - 15,000) / 15,000) * 100 = -20%, and the percentage change in price is ((3 - 2) / 2) * 100 = 50%. Thus, elasticity = -20% / 50% = -0.4, which rounds to 0.6 in absolute value.

As the Price of Samosas (A Triangular Pastry in India)