Question

Elasticity of supply of a commodity is 2. When its price falls from Rs. 10 to Rs. 8 per unit, its quantity supplied falls by 500 units. Calculate quantity supplied at reduced rate.

750 units

250 units

350 units

450 units

Answer 1

Answer:

750 units.

Plz refer the attachment. I hope this is helpful

Answer 2

Given:

Price (p) = 10

Commodity (E) = 2

To Find:

Quantity supplies at reduce rate

Explanation:

When p is 10 then

Δp = 10 - 8

     = 2

ΔQ = 500

Therefore E = 2

Now using the formula E = (ΔQ/Q) × (P/ΔP)

2 = (500/Q) × (10/2)

2 = 5000/2Q

∴ Q = (5000/4)

∴ Q = 1250

Now Quality supplied at reduced rate =

Q - ΔQ = 1250 - 500

            = 750 units

Therefore answer is option (a) 750 units.