Question

the elasticity of supply of a good is 3. A seller supplies 20 unit's at a price of Rs 8 per unit. How much

quantity a seller sells when price rises by 2 per unit.​

Answer 1

Answer:

Quantity supplied = 40 units

Explanation:

Elasticity = 3, Q1 = 20, P1 = ₹ 8

P2 = ₹ 10, Q2 = ?

Elasticity of Supply = %∆Q/%∆P

Here we are required to use the Mid point method

$e = \frac{(q2 - q1)(p2 + p1)}{(q2 + q1)(p2 - p1)}$

$3 = \frac{(q2 - 20)(10 + 8)}{(q2 + 20)(10 - 8)}$

$3 = \frac{18(q2 - 20)}{2(q2 + 20)}$

$6(q2 + 20) = 18(q2 - 20)$

$q2 + 20 = 3q2 - 60$

$2q2 = 80$

$q2 = 40$

Quantity Supplied = 40 units