Question

a 15% rise in the price of commodity results in the price of its supply from 600 units to 735 units.Calculate Elasticity of supply

Answer 1

Answer:

the elasticity of supply is 9

Explanation:

you can refer to attachment

Answer 2

Given:

Price rise of the commodity = 15%

Original supply = 600

New supply = 735

To find:

the elasticity of supply.

Solution:

Price rise of the commodity = 15%

Original supply = 600

New supply = 735

Change in supply = (735-600) = 135

The formula for the elasticity of supply.

$Elasticity \: of \: Supply = \frac{\%change \: in \: supply}{\%change \: in \: price}$

adding the value of %change in price as 15% as given by the question.

$Elasticity \: of \: Supply = \frac{ \frac{∆q}{q} \times 100}{15}$

$Elasticity \: of \: Supply = \frac{ \frac{135}{600} \times 100 }{15}$

$Elasticity \: of \: Supply = \frac{ \frac{135}{6} }{15}$

$Elasticity \: of \: Supply = \frac{135}{6} \times \frac{1}{15}$

$Elasticity \: of \: Supply = 1.5$

Therefore, the elasticity of supply is 1.5