Question

The market price of a good changes from Rs 5 to Rs 20. As a result, the quantity supplied by a firm increases by 15 units. The price elasticity of the firm’s supply curve is 0.5. Find the initial and final output levels of the firm.

Answer 1

Explanation:

5+20=25 hope you can help you

Answer 2

Answer:

25

Explanation:

Change in quantity = 15  units (Given)

Change in price = Rs. 15  (Given)

Therefore,

The proportionate change in Price

= 15/5

= 3

0.5 = Proportionate change in the quantity supplied / 3

Proportionate change in the quantity supplied = 0.5 × 3

= 1.5

Proportionate change in the quantity supplied = 15/x = 1.5

= x = 15 / 1.5 = 10

Supply at a base price of Rs 5 = 10

Therefore,

New supply at the price of 20 will be

= 10 + 15

= 25