Question

If the price of Commodity rise by
20%. in quality supplied increase from
50 units to 70 unit Calculate price
Elasticity of Supply​

Answer 1

Explanation:

Price Elasticity of a supply Es = (Percentage change in the quantity of supply) Qs/ (Percentage change in the price of the commodity) Ps.

Qs = 25 % since there is a change in the quanity of supply by 25 %

Ps = 50% since there is a change in the price of the quantity by 50 %

Thus, Es = 25/50 = 0.5.

Since, Es is less than 1 but not equal to 0 it is inelastic which is also the degree of price elasticity.