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
New: SSC CHSL Tier 2 answer key released | SSC CHSL 2024 Notification PDF
Recommended: How to crack SSC CHSL | SSC CHSL exam guide
Don't Miss: Month-wise Current Affairs | Upcoming government exams
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
Related Questions
Know More about
Staff Selection Commission Combined High ...
Result | Eligibility | Application | Admit Card | Answer Key | Preparation Tips | Cutoff
Get Updates Brochure
Your Staff Selection Commission Combined Higher Secondary Level Exam brochure has been successfully mailed to your registered email id “”.
