Question

A firm supplies a certain quantity of a good at a price of rupees 10 per unit when prices change is to rupees 9 per unit the firm supplies 10 unit / price elasticity of supply is one what is quantity supplied before price change?

Answer 1

Answer:

Before price change, QS = 11 units

Explanation:

Since elasticity of Supply is 1 or unitary, it means that the quantity supplied will change in the same proportion as the change in price.

And a reduction in price will cause a reduction in quantity supplied (Law of supply).

Since the price reduced by 1 (from 10 to 9 per unit)

So, we can safely say that the quantity supplied would also have reduced by 1 unit (from 11 to 10 units)

Therefore, the QS before change in price was 11 units.