Question

1 Total revenue of a firm
get double due to 25% rise in price
of commodity & If the initial Supply
area 1000 unit at the price £ 12 Calculate
price elasticity of supply​

Answer 1

Price elasticity of supply = % change in quantity supplied / % change in price

Therefore, Price elasticity of supply= ((120-100)/(120+100))*( (5-4)/(5+4))

= 0.80

Since, price elasticity of supply is less than 1, supply of this commodity is inelastic. This means that a shift in price won't drastically affect the supply of the commodity.