Suppose a consumer purchase 15 bananas when its price is Rs. 5 per banana. When the price increases to Rs. 7 per banana, consumer reduces his demand to 12 bananas. Price elasticity of demand would be .............

0.5

The correct answer is Option (1) → 0.5

Given Values:

• Initial Quantity ($Q^1$): $15$ bananas

• New Quantity ($Q^2$): $12$ bananas

• Initial Price ($P^1$): Rs. $5$

• New Price ($P^2$): Rs. $7$

$e_d$ = |(∆Q/$Q_1$) * ($P_1$/∆P)|

          =| (-3/15) * (5/2)

          =|-3/6|

          = 0.5