if the initial price is rs 10 and initial quantity is 500 units if price falled by 10% and quantity supplies falls to 400 units calculate elasticity of supply
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Answer:
100 units
Explanation:
Givem P=Rs.10;P
1
=Rs.8;
ΔP=P
1
−P=Rs.8−Rs.10=(−)Rs.2
ΔQ=(−)400units;E
s
=4
Price elasticity of supply E
s
=
Q
P
×
ΔP
ΔQ
4=
Q
10
×
−2
−400
4=
Q
2,000
Q=
4
2,000
=500
new quantity =500units−400units=100units
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