{"id":90336,"date":"2025-06-01T10:26:35","date_gmt":"2025-06-01T10:26:35","guid":{"rendered":"https:\/\/exam.pscnotes.com\/mcq\/?p=90336"},"modified":"2025-06-01T10:26:35","modified_gmt":"2025-06-01T10:26:35","slug":"suppose-that-the-price-of-a-commodity-increases-from-%e2%82%b9-90-to-%e2%82%b9-110-and","status":"publish","type":"post","link":"https:\/\/exam.pscnotes.com\/mcq\/suppose-that-the-price-of-a-commodity-increases-from-%e2%82%b9-90-to-%e2%82%b9-110-and\/","title":{"rendered":"Suppose that the price of a commodity increases from \u20b9 90 to \u20b9 110 and"},"content":{"rendered":"

Suppose that the price of a commodity increases from \u20b9 90 to \u20b9 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<\/p>\n

[amp_mcq option1=”1\u00b70″ option2=”2\u00b74″ option3=”0\u00b75″ option4=”2\u00b70″ correct=”option4″]<\/p>\n

\n
\n
This question was previously asked in<\/div>\n
UPSC CAPF – 2019<\/div>\n<\/div>\n
Download PDF<\/a>Attempt Online<\/a><\/div>\n<\/div>\n
\nTo calculate the coefficient of price elasticity of demand, we can use the midpoint formula which is suitable for discrete changes:
\nPED = |(Q2 – Q1) \/ ((Q1 + Q2) \/ 2)| \/ |(P2 – P1) \/ ((P1 + P2) \/ 2)|
\nGiven:
\nP1 = \u20b9 90, Q1 = 240 units
\nP2 = \u20b9 110, Q2 = 160 units
\nChange in Q = Q2 – Q1 = 160 – 240 = -80
\nChange in P = P2 – P1 = 110 – 90 = 20
\nMidpoint Q = (Q1 + Q2) \/ 2 = (240 + 160) \/ 2 = 400 \/ 2 = 200
\nMidpoint P = (P1 + P2) \/ 2 = (90 + 110) \/ 2 = 200 \/ 2 = 100
\nPED = |-80 \/ 200| \/ |20 \/ 100|
\nPED = |-(0.4)| \/ |(0.2)|
\nPED = 0.4 \/ 0.2
\nPED = 2.0
\n<\/section>\n
\n– The price elasticity of demand measures the responsiveness of quantity demanded to a price change.
\n– The formula for arc elasticity (midpoint method) is appropriate for calculating elasticity over a range of prices and quantities.
\n– The absolute value of the calculated elasticity is typically reported.
\n<\/section>\n
\nThe resulting elasticity of 2.0 indicates that demand is elastic between these two price points, as the percentage change in quantity demanded (40%) is greater than the percentage change in price (20%).
\n<\/section>\n","protected":false},"excerpt":{"rendered":"

Suppose that the price of a commodity increases from \u20b9 90 to \u20b9 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 [amp_mcq option1=”1\u00b70″ option2=”2\u00b74″ option3=”0\u00b75″ option4=”2\u00b70″ correct=”option4″] This question was previously asked … <\/p>\n

Detailed SolutionSuppose that the price of a commodity increases from \u20b9 90 to \u20b9 110 and<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1085],"tags":[1119,1120,1261],"class_list":["post-90336","post","type-post","status-publish","format-standard","hentry","category-upsc-capf","tag-1119","tag-economic-development","tag-nature-of-indian-economy","no-featured-image-padding"],"yoast_head":"\nSuppose that the price of a commodity increases from \u20b9 90 to \u20b9 110 and<\/title>\n<meta name=\"description\" content=\"To calculate the coefficient of price elasticity of demand, we can use the midpoint formula which is suitable for discrete changes: PED = |(Q2 - Q1) \/ ((Q1 + Q2) \/ 2)| \/ |(P2 - P1) \/ ((P1 + P2) \/ 2)| Given: P1 = \u20b9 90, Q1 = 240 units P2 = \u20b9 110, Q2 = 160 units Change in Q = Q2 - Q1 = 160 - 240 = -80 Change in P = P2 - P1 = 110 - 90 = 20 Midpoint Q = (Q1 + Q2) \/ 2 = (240 + 160) \/ 2 = 400 \/ 2 = 200 Midpoint P = (P1 + P2) \/ 2 = (90 + 110) \/ 2 = 200 \/ 2 = 100 PED = |-80 \/ 200| \/ |20 \/ 100| PED = |-(0.4)| \/ |(0.2)| PED = 0.4 \/ 0.2 PED = 2.0 - The price elasticity of demand measures the responsiveness of quantity demanded to a price change. - The formula for arc elasticity (midpoint method) is appropriate for calculating elasticity over a range of prices and quantities. - The absolute value of the calculated elasticity is typically reported.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/exam.pscnotes.com\/mcq\/suppose-that-the-price-of-a-commodity-increases-from-\u20b9-90-to-\u20b9-110-and\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Suppose that the price of a commodity increases from \u20b9 90 to \u20b9 110 and\" \/>\n<meta property=\"og:description\" content=\"To calculate the coefficient of price elasticity of demand, we can use the midpoint formula which is suitable for discrete changes: PED = |(Q2 - Q1) \/ ((Q1 + Q2) \/ 2)| \/ |(P2 - P1) \/ ((P1 + P2) \/ 2)| Given: P1 = \u20b9 90, Q1 = 240 units P2 = \u20b9 110, Q2 = 160 units Change in Q = Q2 - Q1 = 160 - 240 = -80 Change in P = P2 - P1 = 110 - 90 = 20 Midpoint Q = (Q1 + Q2) \/ 2 = (240 + 160) \/ 2 = 400 \/ 2 = 200 Midpoint P = (P1 + P2) \/ 2 = (90 + 110) \/ 2 = 200 \/ 2 = 100 PED = |-80 \/ 200| \/ |20 \/ 100| PED = |-(0.4)| \/ |(0.2)| PED = 0.4 \/ 0.2 PED = 2.0 - The price elasticity of demand measures the responsiveness of quantity demanded to a price change. - The formula for arc elasticity (midpoint method) is appropriate for calculating elasticity over a range of prices and quantities. - The absolute value of the calculated elasticity is typically reported.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/exam.pscnotes.com\/mcq\/suppose-that-the-price-of-a-commodity-increases-from-\u20b9-90-to-\u20b9-110-and\/\" \/>\n<meta property=\"og:site_name\" content=\"MCQ and Quiz for Exams\" \/>\n<meta property=\"article:published_time\" content=\"2025-06-01T10:26:35+00:00\" \/>\n<meta name=\"author\" content=\"rawan239\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"rawan239\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"1 minute\" \/>\n<!-- \/ Yoast SEO Premium plugin. -->","yoast_head_json":{"title":"Suppose that the price of a commodity increases from \u20b9 90 to \u20b9 110 and","description":"To calculate the coefficient of price elasticity of demand, we can use the midpoint formula which is suitable for discrete changes: PED = |(Q2 - Q1) \/ ((Q1 + Q2) \/ 2)| \/ |(P2 - P1) \/ ((P1 + P2) \/ 2)| Given: P1 = \u20b9 90, Q1 = 240 units P2 = \u20b9 110, Q2 = 160 units Change in Q = Q2 - Q1 = 160 - 240 = -80 Change in P = P2 - P1 = 110 - 90 = 20 Midpoint Q = (Q1 + Q2) \/ 2 = (240 + 160) \/ 2 = 400 \/ 2 = 200 Midpoint P = (P1 + P2) \/ 2 = (90 + 110) \/ 2 = 200 \/ 2 = 100 PED = |-80 \/ 200| \/ |20 \/ 100| PED = |-(0.4)| \/ |(0.2)| PED = 0.4 \/ 0.2 PED = 2.0 - The price elasticity of demand measures the responsiveness of quantity demanded to a price change. - The formula for arc elasticity (midpoint method) is appropriate for calculating elasticity over a range of prices and quantities. - The absolute value of the calculated elasticity is typically reported.","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/exam.pscnotes.com\/mcq\/suppose-that-the-price-of-a-commodity-increases-from-\u20b9-90-to-\u20b9-110-and\/","og_locale":"en_US","og_type":"article","og_title":"Suppose that the price of a commodity increases from \u20b9 90 to \u20b9 110 and","og_description":"To calculate the coefficient of price elasticity of demand, we can use the midpoint formula which is suitable for discrete changes: PED = |(Q2 - Q1) \/ ((Q1 + Q2) \/ 2)| \/ |(P2 - P1) \/ ((P1 + P2) \/ 2)| Given: P1 = \u20b9 90, Q1 = 240 units P2 = \u20b9 110, Q2 = 160 units Change in Q = Q2 - Q1 = 160 - 240 = -80 Change in P = P2 - P1 = 110 - 90 = 20 Midpoint Q = (Q1 + Q2) \/ 2 = (240 + 160) \/ 2 = 400 \/ 2 = 200 Midpoint P = (P1 + P2) \/ 2 = (90 + 110) \/ 2 = 200 \/ 2 = 100 PED = |-80 \/ 200| \/ |20 \/ 100| PED = |-(0.4)| \/ |(0.2)| PED = 0.4 \/ 0.2 PED = 2.0 - The price elasticity of demand measures the responsiveness of quantity demanded to a price change. - The formula for arc elasticity (midpoint method) is appropriate for calculating elasticity over a range of prices and quantities. - The absolute value of the calculated elasticity is typically reported.","og_url":"https:\/\/exam.pscnotes.com\/mcq\/suppose-that-the-price-of-a-commodity-increases-from-\u20b9-90-to-\u20b9-110-and\/","og_site_name":"MCQ and Quiz for Exams","article_published_time":"2025-06-01T10:26:35+00:00","author":"rawan239","twitter_card":"summary_large_image","twitter_misc":{"Written by":"rawan239","Est. reading time":"1 minute"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"WebPage","@id":"https:\/\/exam.pscnotes.com\/mcq\/suppose-that-the-price-of-a-commodity-increases-from-%e2%82%b9-90-to-%e2%82%b9-110-and\/","url":"https:\/\/exam.pscnotes.com\/mcq\/suppose-that-the-price-of-a-commodity-increases-from-%e2%82%b9-90-to-%e2%82%b9-110-and\/","name":"Suppose that the price of a commodity increases from \u20b9 90 to \u20b9 110 and","isPartOf":{"@id":"https:\/\/exam.pscnotes.com\/mcq\/#website"},"datePublished":"2025-06-01T10:26:35+00:00","dateModified":"2025-06-01T10:26:35+00:00","author":{"@id":"https:\/\/exam.pscnotes.com\/mcq\/#\/schema\/person\/5807dafeb27d2ec82344d6cbd6c3d209"},"description":"To calculate the coefficient of price elasticity of demand, we can use the midpoint formula which is suitable for discrete changes: PED = |(Q2 - Q1) \/ ((Q1 + Q2) \/ 2)| \/ |(P2 - P1) \/ ((P1 + P2) \/ 2)| Given: P1 = \u20b9 90, Q1 = 240 units P2 = \u20b9 110, Q2 = 160 units Change in Q = Q2 - Q1 = 160 - 240 = -80 Change in P = P2 - P1 = 110 - 90 = 20 Midpoint Q = (Q1 + Q2) \/ 2 = (240 + 160) \/ 2 = 400 \/ 2 = 200 Midpoint P = (P1 + P2) \/ 2 = (90 + 110) \/ 2 = 200 \/ 2 = 100 PED = |-80 \/ 200| \/ |20 \/ 100| PED = |-(0.4)| \/ |(0.2)| PED = 0.4 \/ 0.2 PED = 2.0 - The price elasticity of demand measures the responsiveness of quantity demanded to a price change. - The formula for arc elasticity (midpoint method) is appropriate for calculating elasticity over a range of prices and quantities. - The absolute value of the calculated elasticity is typically reported.","breadcrumb":{"@id":"https:\/\/exam.pscnotes.com\/mcq\/suppose-that-the-price-of-a-commodity-increases-from-%e2%82%b9-90-to-%e2%82%b9-110-and\/#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/exam.pscnotes.com\/mcq\/suppose-that-the-price-of-a-commodity-increases-from-%e2%82%b9-90-to-%e2%82%b9-110-and\/"]}]},{"@type":"BreadcrumbList","@id":"https:\/\/exam.pscnotes.com\/mcq\/suppose-that-the-price-of-a-commodity-increases-from-%e2%82%b9-90-to-%e2%82%b9-110-and\/#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/exam.pscnotes.com\/mcq\/"},{"@type":"ListItem","position":2,"name":"UPSC CAPF","item":"https:\/\/exam.pscnotes.com\/mcq\/category\/upsc-capf\/"},{"@type":"ListItem","position":3,"name":"Suppose that the price of a commodity increases from \u20b9 90 to \u20b9 110 and"}]},{"@type":"WebSite","@id":"https:\/\/exam.pscnotes.com\/mcq\/#website","url":"https:\/\/exam.pscnotes.com\/mcq\/","name":"MCQ and Quiz for Exams","description":"","potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/exam.pscnotes.com\/mcq\/?s={search_term_string}"},"query-input":"required name=search_term_string"}],"inLanguage":"en-US"},{"@type":"Person","@id":"https:\/\/exam.pscnotes.com\/mcq\/#\/schema\/person\/5807dafeb27d2ec82344d6cbd6c3d209","name":"rawan239","image":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/exam.pscnotes.com\/mcq\/#\/schema\/person\/image\/","url":"https:\/\/secure.gravatar.com\/avatar\/761a7274f9cce048fa5b921221e7934820d74514df93ef195a9d22af0c1c9001?s=96&d=mm&r=g","contentUrl":"https:\/\/secure.gravatar.com\/avatar\/761a7274f9cce048fa5b921221e7934820d74514df93ef195a9d22af0c1c9001?s=96&d=mm&r=g","caption":"rawan239"},"sameAs":["https:\/\/exam.pscnotes.com"],"url":"https:\/\/exam.pscnotes.com\/mcq\/author\/rawan239\/"}]}},"amp_enabled":true,"_links":{"self":[{"href":"https:\/\/exam.pscnotes.com\/mcq\/wp-json\/wp\/v2\/posts\/90336","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/exam.pscnotes.com\/mcq\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/exam.pscnotes.com\/mcq\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/exam.pscnotes.com\/mcq\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/exam.pscnotes.com\/mcq\/wp-json\/wp\/v2\/comments?post=90336"}],"version-history":[{"count":0,"href":"https:\/\/exam.pscnotes.com\/mcq\/wp-json\/wp\/v2\/posts\/90336\/revisions"}],"wp:attachment":[{"href":"https:\/\/exam.pscnotes.com\/mcq\/wp-json\/wp\/v2\/media?parent=90336"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/exam.pscnotes.com\/mcq\/wp-json\/wp\/v2\/categories?post=90336"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/exam.pscnotes.com\/mcq\/wp-json\/wp\/v2\/tags?post=90336"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}