Read the passage carefully and answer the questions based on the passage:

Elasticity of Demand

The demand for a good moves in the opposite direction to its price. But the impact of the price change is always not the same. Sometimes, the demand for a good changes considerably even for small price changes. On the other hand, there are some goods for which the demand is not affected much by price changes. Demands for some goods are very responsive to price changes while demands for certain others are not so responsive to price changes. Price elasticity of demand is a measure of the responsiveness of the demand for a good to changes in its price. The price elasticity of demand for a good depends on the nature of the good and the availability of close substitutes of the good. 

An individual buys 15 kg of sugar when its price is Rs. 5 per kg. When the price increases to Rs. 7 per kg, the demand goes down to 12 kg of sugar. What is the price elasticity of demand for sugar?

0.5

The correct answer is Option (2) → 0.5

$Q_1$​=15 kg

$Q_2$​= 12 kg

$P_1$ =₹5

$P_2$​=₹7

ΔQ = $Q_2-Q_1$ = 12 - 15 = -3

ΔP =  $P_2 -P_1$ = 7- 5 = 2

Percentage change in quantity demanded = [ΔQ/$Q_1$] * 100 

                                                                      = [-3/15 ] *100

                                                                       = - 20

Percentage change in Market price = [ΔP/$P_1$] * 100 

                                                          = [2/5] * 100

                                                          = 40

Price elasticity of demand |eD|= |percentage change in quantity demanded/ percentage change in the price of the good|

     = |- 20/40|

     = 0.5