"Price is not the same thing as value. Suppose that on a day the price of everything viz., coal, bread, postage stamps, a day's labour, the rent of houses, etc. were to double. Prices then would certainly rise, but values of all things except one would not." The writer wants to say that if prices of all things were doubled
- (a) the values of all things would remain constant.
- (b) the values of the things sold would be doubled.
- (c) the values of the things bought would be halved.
- (d) the value of money only would be halved. ✓ UPSC's answer
Why the answer is (d)
• The passage distinguishes price, which is the money expression of a good, from value, which is its relative worth in exchange.
• If every price doubles, the exchange ratio between any two goods remains unchanged, so coal still buys the same amount of bread as before.
• Therefore the real values of coal, bread, postage stamps, labour, rent, and other goods do not change.
• But a given sum of money now buys only half the quantity it bought before, so the purchasing power of money is halved.
• Hence the only thing whose value changes is money, making option (d) correct.
Why the other options are wrong
- (a) the values of all things would remain constant.
- It is wrong because the passage says the values of all things except one would not change, and that one thing is money.
- (b) the values of the things sold would be doubled.
- It is wrong because doubling all prices leaves the relative values of sold goods unchanged, not doubled.
- (c) the values of the things bought would be halved.
- It is wrong because the values of bought goods are not halved; only the value of money is halved.
Asked in the CSAT Paper II of the UPSC Civil Services Preliminary Examination 2014, held on 24 August 2014. Question and answer key: Union Public Service Commission. Explanation: UPSC Answer Check.