Kumar used to eat 30 samosas in a month when the price of each samosa was f 1 2. When the price of samosa increased to ?15 per piece, he eats only 20 samosas a month. What is the price elasticity of demand for samosa by Kumar?

Price elasticity of demand measures the responsiveness of quantity demanded to a change in price [2]. It is calculated as the percentage change in quantity demanded divided by the percentage change in price. Using the basic percentage change formula (point method) based on initial values: the initial price (P1) is ₹12 and quantity (Q1) is 30; the new price (P2) is ₹15 and quantity (Q2) is 20. The percentage change in quantity is ((20 - 30) / 30) = -33.33% [1]. The percentage change in price is ((15 - 12) / 12) = 25% [1]. Dividing -33.33% by 25% yields an elasticity of -1.33. In economics, elasticity is often expressed by its absolute value. Thus, the price elasticity of demand for Kumar's samosas is 1.33, indicating elastic demand where quantity changes proportionately more than price [2].

Sources

1. [2] https://www.khanacademy.org/economics-finance-domain/microeconomics/elasticity-tutorial/price-elasticity-tutorial/a/price-elasticity-of-demand-and-price-elasticity-of-supply-cnx
2. [1] https://www.investopedia.com/terms/a/arc-elasticity.asp