Question

Economics Question -

The market price of a good changes from ₹5 to ₹20.As a result, the quantity supplied by a firm increases by 15 units. The price elasticity of the firm's supply curve is 0.5.Find the initial and final levels of the firm.
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Answer 1

★ Question ;

The market price of a good changes from ₹5 to ₹20.As a result, the quantity supplied by a firm increases by 15 units. The price elasticity of the firm's supply curve is 0.5.Find the initial and final levels of the firm.

concept;

Elasticity of supply is measured as the ratio of proportionate change in the quantity supplied to the proportionate change in price.

↪elasticity of supply

= % change in quantity supplied / % change in price.

★ Answer :

Elasticity of Supply, es = 0.5

Initial Price, P1 = Rs 5

Final price, P2 = Rs 20

ΔP = P2 - P1 = 20 - 5

then ,

ΔP = 15

ΔQ = 15

es = ΔQ/ΔP x P1/Q1

$0.5 = \frac{15}{15} \times \frac{5}{Q1}$

$0.5 = \frac{5}{Q1}$

$Q1 = \frac{5}{0.5}$

Q 1 = 10units

Initial quantity = 10 units

then,

Final quantity,Q2 = ΔQ + Q1 = 15 + 10

Therefore, Q2 = 25 units

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Answer 2

answer :-

Elasticity of Supply, es = 0.5

Elasticity of Supply, es = 0.5Initial Price, P1 = Rs 5

Elasticity of Supply, es = 0.5Initial Price, P1 = Rs 5Final price, P2 = Rs 20

Elasticity of Supply, es = 0.5Initial Price, P1 = Rs 5Final price, P2 = Rs 20ΔP = P2 - P1 = 20 - 5

Elasticity of Supply, es = 0.5Initial Price, P1 = Rs 5Final price, P2 = Rs 20ΔP = P2 - P1 = 20 - 5then ,

Elasticity of Supply, es = 0.5Initial Price, P1 = Rs 5Final price, P2 = Rs 20ΔP = P2 - P1 = 20 - 5then ,ΔP = 15

Elasticity of Supply, es = 0.5Initial Price, P1 = Rs 5Final price, P2 = Rs 20ΔP = P2 - P1 = 20 - 5then ,ΔP = 15ΔQ = 15

es = ∆Q/∆P × P1 × Q1

$0.5 = \frac{15}{15} \times \frac{5}{q1}$

$0.5 = \frac{5}{q1}$

$q1 = \frac{5}{0.5}$

$q1 = 10$

intinal quantity = 10 unit

final quantity = Q2 = ∆Q+Q1

Q2 = 15+10

Q2 = 25

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