Question

.Price of a commodity increases from Rs. 10 to Rs. 12. As a result, the supply rises from 35 units to 42 units. Find out the elasticity of supply.

Answer 1

Answer:

25.Total Revenue at a price of Rs 4 per unit of a commodity is ?Rs 480. Total Revenue increases by Rs 240 when its price rises by 25%. Calculate its Price Elasticity of Supply (Delhi 2010).

Explanation:

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Answer 2

The elasticity of supply is 3.5

Given:

Initial price Rs. 10

New Price Rs. 12

initial supply 35 units

new supply 42 units.

To find:

The elasticity of supply.

Solution.

Initial price Rs. 10

New Price Rs. 12

Change in price,

$= new \: price - initial \: price$

$= 12 - 10$

$= 2$

initial supply 35 units

new supply 42 units.

Change in supply,

$= new \: supply - initial \: supply$

$= 42 - 35$

$= 7$

The formula for the elasticity of supply.

$elasticity \: of \: supply. = \frac{change \:in \: quantity }{change \: in \: price}$

$elasticity \: of \: supply. = \frac{7}{2}$

$elasticity \: of \: supply. = 3.5$

Therefore, the elasticity of supply is 3.5.