2019 · Q14
Suppose that the price of a commodity increases from 90 to 110 and the demand curve shows that the corresponding reduction in quantity demanded is from 240 units to 160 units. Then, the coefficient of the price elasticity of demand will be
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- A1.0
- B2.4
- C0.5
- D2.0
Explanation
Using the point formula, %change in quantity = (160-240)/240 = -33.3% and %change in price = (110-90)/90 = 22.2%, giving elasticity of about 1.5, which is not among the options; the arc (midpoint) formula instead gives 40%/20% = 2.0, i.e. option D. Because the answer depends on which formula is used, UPSC dropped this item (marked X in the official key) and it was not counted for scoring - key disputed. The stored key D is retained only because the schema requires an option key.