Question

A seller of potatoes sells 80 Kgs of potatoes a day when the price of potatoes is Rs 4 per Kg. Price elasticity of potatoes is known to be 2. How much quantity of potatoes will the seller supply when price rises to Rs 5 per Kg?

Answer 1

Answer:es = P / S x ∆ s / ∆ p  2 = 4 / 80 x ∆ s /1  2 = 4∆ s / 80  4∆ s = 80 x 2  4 ∆ s = 160  ∆ s = 160 / 4 = 40 Total supply by the seller at price of Rs. 5 = S + ∆S = 80 + 40 = 120 Kgs