Question

A firm supplies a certain quantity of a good at a price of Rs. 10 per unit. When price changes to Rs. 9 per unit, the firm supplies 10 units less. The price elasticity of supply is 1. What is the quantity supplied before the change? Calculate.

Answer 1

Step by step explanation:

Given: $P=9$, $P1= 10$ and $E2=1$

To find: Quantity supplied before the price change.

For calculation of quantity supplied before,

We know that change in quantity is (ΔQ) is $10$

$P=10$, $P1= -9$ and $E2=1$

⇒ Δ$P= P1-P$

⇒ $10-9$

⇒ $1$

∴ Price elasticity of Supply $E2=$ Δ $\frac{Q}{P}$ × $\frac{P}{Q}$

⇒ $1= \frac{10}{1}$ × $\frac{10}{Q}$

⇒ $1=\frac{100}{Q}$

⇒ $Q=100$

The quantity supplied before the price change was $100$ units.