Question

A seller sells 80 quintels of rice when the price of it is Rs 4 per kg. The elasticity of supply is to be 2.

How much quantity will the seller supply when the price rises to 5 per kg.​

Answer 1

Answer:

New Quantity Supplied = 125.71

Explanation:

Price, P1 = ₹ 4, Quantity, Q1 = 80 quintels

Elasticity, e = 2

When Price, P2 rises to ₹ 5 per kg

Q2 =?

Elasticity = %∆ Q /%∆P

$e = \frac{(q2 - q1)(p2 + p1)}{(q2 + q1)(p2 - p1)}$

$2 = \frac{(q2 - 80)(5 + 4)}{(q2 + 80)(5 - 4)}$

$2(q2 + 80) = 9(q2 - 80)$

$2q2 + 160 = 9q2 - 720$

$9q2 - 2q2 = 160 + 720$

$7q2 = 880$

$q2 = \frac{880}{7}$

$q2 = 125.71$

Quantity supplied = 125.71 Quintels