At the market price of Rs 10, a firm supplies 4 units of output. The market price increases to Rs 30. The price elasticity of the firm’s supply is 1.25. What quantity will the firm supply at the new price?
Answers
Answered by
2
Explanation:
gai che to me na 89feet and rohan wedd
Answered by
6
Answer:
14 units
Explanation:
Initial price of the unit = P1 = Rs 10 (Given)
Initial output of the unit = Q1 = 4 units (Given)
Final Price of the unit = P2 = Rs 30 (Given)
Therefore,
Price = ΔP = P2 - P1
= 30 - 10
= 20
Elasticity of supply, es = 1.25
es =ΔQ/ΔP x P1/Q1
1.25 = ΔQ/20 x 10/4
= 1.25 x 8 = ΔQ
= ΔQ = 10 units
Thus, the final output supplied will be -
= Q2 = ΔQ + Q1 Q2
= 10 + 4
= 14 units
Similar questions