Q. Consider the following statements:
If a commodity has a low price, it shall tend to keep low price elasticity
The price elasticity of rice is less than price elasticity of Wheat
Which among the above statements is / are correct?
Answer: 1 only
Notes:
- If a commodity has a low price, it shall tend to keep low price elasticity: This statement is generally correct. Price elasticity of demand measures how sensitive the quantity demanded of a good is to changes in its price. If a commodity has a low price, it means that small changes in its price are less likely to result in significant changes in the quantity demanded. In such cases, the price elasticity tends to be low because consumers are not very responsive to price changes.
- The price elasticity of rice is less than the price elasticity of wheat: This statement is not necessarily correct. The price elasticity of rice and wheat can vary based on a variety of factors. Price elasticity depends on factors such as the availability of substitutes, consumer preferences, and the proportion of income spent on the commodity. In some cases, rice may have a lower price elasticity than wheat, indicating that consumers are less responsive to changes in the price of rice compared to wheat. However, this can vary by region and market conditions. It's essential to analyze specific data and market dynamics to determine the price elasticity of these commodities accurately.
Above question is part of 10000+ MCQs for UPSC (Prelims) Paper-1 course in GKToday Android app.
