Suppose Prachi buys 30 bananas when its price is Rs. 10 per banana. W…

The correct answer is Option (1) → 0.5

When the price of a good rises, people buy less of it. The price elasticity of demand measures how strongly they react: it is the percentage change in quantity demanded divided by the percentage change in price.

Given:

• Old price, P₁ = Rs. 10; new price, P₂ = Rs. 14

• Old quantity, Q₁ = 30 bananas; new quantity, Q₂ = 24 bananas

The formula:

• e_D = (percentage change in quantity demanded) ÷ (percentage change in price)

The two percentage changes:

• Percentage change in quantity = (24 − 30) ÷ 30 × 100 = −20

• Percentage change in price = (14 − 10) ÷ 10 × 100 = 40

The elasticity:

• e_D = −20 ÷ 40 = −0.5

• The sign is negative because demand falls when price rises; in absolute terms the elasticity is 0.5.

• Since 0.5 is less than 1, the demand for bananas here is inelastic: a 40 per cent rise in price cuts the quantity bought by only 20 per cent.

• In absolute terms, |e_D| = 0.5, which is Option (1).

Note 1: This question is the NCERT book’s own Example 2.2 with the figures doubled: the book has 15 and 12 bananas at Rs. 5 and Rs. 7 per banana. The percentage changes, 20 and 40, and the answer, 0.5, are the same as in the book.

Note 2: A same/similar question was asked in CUET (UG) in the papers below.

* A similar question.