Suppose the price of mangoes increases from Rs20 per kg to Rs75 per kg. Due to this the demand for mangoes declines from 100kg to 50kg Which one of the following is the price elasticity of demand for mangoes?
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Answer:
19/33
0.576
Step-by-step explanation:
price of mangoes increases from Rs20 per kg to Rs75 per kg
% Change in Price of Mango = {(75 - 20)/((75 + 20)/2) } * 100
= (55 * 2/95) * 100
= (22/19) * 100
Change in Demand = (( 50 - 100)/((50 + 100)/2)) * 100
= (-50 * 2/150) * 100
= (-2/3) * 100
elasticity of demand for mangoes = % Change in Demand / %Change in Price of Mango
= (2/3)/(22/19)
= 19/33
= 0.576
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