Question

73. The price of a commodity increases from * 5 per unit in 1990 to 7.50 per unit in 1995 and
the quantity consumed decreases from 120 units in 1990 to 90 units in 1995. The price and
quantity in 1995 are 150% and 75% respectively of the corresponding price and quantity
in 1990. Therefore, the product of the price ratio and quantity ratio is :
(a) 1.8
(b) 1.125
(c) 1.75
(d) None of these.
​

Answer 1

Given:

Given that, the price of a commodity which was 5 in 1990 has increased to $7.5$ per unit in 1995 and the quantity consumed was 120 which has come down to 90 units in the same years respectively.

To find:

We have to find the product of price ratio and quantity ratio.

Solution:

Let us first find out the product of price and quantity in 1995 after the changes.

So,

Product of price and quantity $= 7.50 \times 90 = 675$

Now, we will find the product of price and quantity in 1990.

So,

Product of price and quantity $= 5 \times 120 = 600$

Now we have to find the required ratio, so

Ratio $=\frac{675}{600}$

        $= \frac{27}{24}= \frac{9}{8} = 1.125$

Therefore, Ratio is equal to $1.125$.