Question

state the methods of measuring
elasticity of supply.​

Answer 1

Explanation:

h9bubbu9h9vf7xz5rcufcr6c8v8y

Answer 2

Answer:

Methods of Measuring Elasticity of Supply:

Apart from determining the elasticity or inelasticity of supply, an organization needs to estimate the numerical value of elasticity of supply for making various business decisions.

The numerical value of elasticity of supply can be measured with the help of the following methods:

i. Proportionate Method:

Refers to one of the important methods of measuring elasticity of supply. In this method, elasticity of supply can be calculated by dividing the percentage change in quantity supplied with the percentage change in price of a product.

The formula used for calculating elasticity of supply through proportionate method is as follows:

eS = Percentage change in quantity supplied/Percentage change in price

Percentage change in quantity supplied = New quantity supplied (∆S)/Original quantity supplied (S)

Percentage change in price = New price (∆P)/original Price (P)

The symbolic representation of elasticity of supply is as follows:

eS = ∆S/S : ∆P/P

eS = ∆S/S * P/∆P

eS = ∆S/∆P * P/S

Change in quantity supplied (∆S) is the difference between the new quantity supplied (S) and original quantity supplied(S).

It can be calculated by the following formula:

∆S = S1-S

Similarly, change in price is the difference between the new price (P) and original price (P).

It can be calculated by the following formula:

∆P = P1 – P

For example, quantity supplied of a product increases from 1000 units to 1500 units and price changes from Rs. 50 to Rs. 55 per unit.

In such a case, the elasticity of supply would be as follows:

P1 = Rs. 55, P = Rs. 50, S1 = 1500 units, S = 1000 units

Therefore, ∆S = S1 – S = 1500 – 1000 = 500 units and ∆P = P1 – P = Rs. 55 – Rs. 50 = Rs. 5

eS = 500/5 * 50/1000 = 0.5 (less than unit)

According to this method, if the numerical value of elasticity of supply is more than one, it represents relatively elastic supply. On the other hand, if the numerical value of elasticity of supply is less than one, then the elasticity of supply would be relatively inelastic. Apart from this, if the numerical value of elasticity of supply is equal to one, it would represent unitary elastic supply.

ii. Point Method:

Refers to the method in which elasticity of supply is measured at a particular point on the supply curve. In such a case, to measure the elasticity of supply, a tangent needs to be drawn along with the demand curve.

The calculation of elasticity of supply at a particular point would be clearer with the help of Figure-20:

The numerical value of elasticity of supply can be measured with the h

In Figure-20, TF tangent is drawn from the point P to measure elasticity of supply. This tangent meets X axis at T point. Another vertical line from P is intersecting X-axis at B point.

Now, we can calculate elasticity of supply at point P as under:

eS = TB/OB

Explanation:

i have explained ur ans..

I hope it helps you