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 : If hiring extra workers increases a factory's output from 1000 to 1200 units per day, but the factory has to reduce the price of its product from Rs. 25 to Rs. 24 per unit to sell the additional output, the Marginal Revenue Product of the last worker is:
Option 1: Rs. 3800
Option 2: Rs. 200
Option 3: Rs. 4000
Option 4: Rs. 100
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