Question : If the number of goods demanded increases from 4000 to 6000 when the average income of the population increases from Rs. 26000 to Rs. 30000, find the Arc Income Elasticity of Demand.
Option 1: 0.5
Option 2: 2
Option 3: 1.4
Option 4: 2.8
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Correct Answer: 2.8
Solution : The correct option is 2.8.
Arc elasticity is the elasticity of one variable concerning another between two given points.
Arc Income Elasticity of Demand = [(Q2 - Q1)/((Q1 + Q2)/2)]/[(Y2 - Y1)/((Y1 + Y2)/2)]
Where: Q1 = Initial quantity demanded (4000), Q2 = Final quantity demanded (6000) Y1 = Initial average income (Rs. 26,000) Y2 = Final average income (Rs. 30,000)
Income Elasticity of Demand = [(6000 - 4000)/((4000 + 6000)/2)]/[(30000 - 26000)/((26000 + 30000)/2)]
Income Elasticity of Demand = 2.8
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Question : If the price of an article decreases from Rs. 80 to Rs. 60, the quantity demanded increases from 600 to 750 units. Find the point elasticity of demand.
Option 1: -1
Option 2: 1
Option 3: -1.25
Option 4: 1.25
Question : The average monthly income of A and B is Rs, 7,000. The average monthly income of B and C is Rs, 7,750 and the average monthly income of C and A is Rs, 6,750. What is the monthly income of B?
Option 1: Rs. 6,500
Option 2: Rs. 8,000
Option 3: Rs. 7,500
Option 4: Rs. 6,000
Question : The elasticity of demand for price is:
Option 1: Elasticity = Percentage change in demand/Percentage change in time
Option 2: Elasticity = Percentage change in price/Percentage change in demand
Option 3: Elasticity = Percentage change in demand/Percentage change in supply
Option 4: Elasticity = Percentage change in supply/Percentage change in price
Question : The income of a company increases 20% per year. If the income is Rs. 26,64,000 in the year 2012, then its income in the year 2010 was:
Option 1: Rs. 28,55,000
Option 2: Rs. 18,50,000
Option 3: Rs. 28,20,000
Option 4: Rs. 21,20,000
Question : The compound interest on a sum of money for 2 years is Rs. 615 and the simple interest for the same period is Rs. 600. Find the principal.
Option 1: Rs. 6500
Option 2: Rs. 6000
Option 3: Rs. 8000
Option 4: Rs. 9500
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