Suppose an individual buy 30 bananas when its price is Rs. 10 per banana. When the price increases to Rs. 14 per banana, she reduces her demand to 24 bananas. In this case,what will be the price elasticity of demand?

The correct option is 0.5.

Let's calculate the price elasticity of demand step-by-step using the percentage method:

Step 1: Identify the initial and new values for price and quantity.
Initial Price (P₁) = Rs. 10
New Price (P₂) = Rs. 14
Initial Quantity Demanded (Q₁) = 30 bananas
New Quantity Demanded (Q₂) = 24 bananas

Step 2: Calculate the change in price and quantity.
Change in Price (ΔP) = P₂ - P₁ = 14 - 10 = Rs. 4
Change in Quantity Demanded (ΔQ) = Q₂ - Q₁ = 24 - 30 = -6 bananas (the negative sign indicates a decrease in demand due to a price increase)

Step 3: Calculate the percentage change in quantity demanded. $$\text{Percentage change in quantity demanded}=\frac{\Delta Q}{Q_1}\times 100=\frac{-6}{30}\times 100=-20\%$$

Step 4: Calculate the percentage change in price. $$\text{Percentage change in price}=\frac{\Delta P}{P_1}\times 100=\frac{4}{10}\times 100=40\%$$

Step 5: Calculate the price elasticity of demand (E_d).
The price elasticity of demand is the ratio of the percentage change in quantity demanded to the percentage change in price: $$E_d=-\frac{\text{Percentage change in quantity demanded}}{\text{Percentage change in price}}$$ (Note: By convention, we insert a negative sign in the formula or take the absolute value because price and quantity demanded move in opposite directions.) $$E_d=-\frac{-20\%}{40\%}=0.5$$

Thus, the price elasticity of demand is 0.5.