Question

Q2- If the price of a commodity increases from Rs 40 to Rs 44, as a result Quantity supplied increases by 1000 units. Assuming price elasticity Of supply 0.5, Calculate initial quantity supplied and new quantity supplied.​

Answer 1

P₁=40

p₂=44

%change in price= 44-40/40 *100

=10%

q1=q1

q2=q1+1000

%change in quantity supplied= q1+1000-q1/ q1 *100

=100000/q1 %

price elasticity of supply= 0.5

%change in quantity supplied/ %change in price =0.5

(100000/q1)/10=0.5

100000/q1=5

q1=100000/5

=20000 units

q2= 20000+1000 =21000 units