How is the magnitude of price elasticity for an individual good

How is the magnitude of price elasticity for an individual good determined?

1, 2 and 3

1 and 4 only

1, 2 and 4

3 and 4

Answer is Right!

Answer is Wrong!

This question was previously asked in

UPSC CAPF – 2021

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Based on the common factors determining price elasticity and likely intended factors for this question (although the factors 1, 2, 3, 4 were missing in the prompt), the combination of factors 1, 2, and 3 is the most accurate choice among the given options. Assuming factors 1, 2, and 3 refer to the nature of the good (necessity/luxury), availability of substitutes, and proportion of income spent, respectively, these are all significant determinants.

Key factors that determine the price elasticity of demand for a good include: 1. The nature of the good (necessity vs. luxury); 2. The availability and closeness of substitutes; 3. The proportion of income spent on the good; and 4. The time period under consideration (short run vs. long run).

Assuming the original question listed common factors such as ‘Nature of the good’, ‘Availability of substitutes’, ‘Proportion of income spent’, and ‘Time horizon’ corresponding to options 1, 2, 3, and 4, then all four are valid determinants. However, given the provided answer choices, option A (1, 2 and 3) suggests that factors 1, 2, and 3 (likely Nature, Substitutes, and Proportion of income) were considered the primary determinants relevant to the question’s design, or factor 4 (Time horizon) was either different or not included in the intended correct combination.

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