Question

If the price of burger rises for * 12 per piece to * 20 per piece as a result of which the daily sales
decrease from 300 to 200 pieces per day. The price elasticity of demand can be estimated as
(a) 0.5
(b) 0.8
(c) 0.25
(d) 2.10​

Answer 1

Answer:

0.5

Explanation:

hence the answer would be 0.5

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Answer 2

Given:

price of burger rises to rupees 12.00 per piece to rupees 20 per piece

the demand for burgers decreases from 300 to 200 pieces per day

To find:

elasticity of demand

Solution:

Original Price - Rs. 12

New Price - Rs. 20

Original Demand - 300

New Demand - 200

The formula for price elasticity is

$Price \: Elasticity = \frac{ \frac{change \: in \: demand}{original \: demand} }{ \frac{change \: in \: price \: }{original \: price} }$

$Change \: in \: price = 20 - 12$

$Change \: in \: price = 8$

$Change \: in \: demand = 300 - 200$

$Change \: in \: demand = 100$

adding the values in the formula

$Price \: Elasticity = \frac{ \frac{100}{300} }{ \frac{8}{12} }$

solving,

$Price \: Elasticity = \frac{100}{300} \times \frac{12}{8}$

$Price \: Elasticity = \frac{1}{2}$

$Price \: Elasticity = 0.2$

Therefore, the price elasticity of demand for the burgers is 0.2