Question

If an increasing price of a pen from Rs 50 to 60 results an increase in quantity supply of pen from

1500 to 2000.what is the elasticity of supply​

Answer 1

Answer:

Elasticity of Supply = 0.0129

Explanation:

Price increases from ₹ 50 to ₹ 60.

Quantity supplied changes from 1,500 to 2,000.

The price elasticity of demand is defined as

Elasticity of supply = %∆Q/%∆P

apply the formula of mid point method

$e = \frac{ \frac{q2 - q1}{ \frac{q2 + q1}{2} } }{ \frac{p2 - p1}{ \frac{p2 + p1}{2} } }$

on simplifying the above formula we get

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

Plug in the given values we get

$e = \frac{(2000 - 1500)(60 + 50)}{(2000 + 1500)(60 - 50)}$

$e = \frac{500 \times 10}{3500 \times 110}$

$e = 0.0129$

Elasticity of supply = 0.0129