Question

The price of a commodity rises from Rs 20.00 to Rs 40.00. Consequently its
supply increases from 100 units to 400 units. Calculate the price elasticity of
supply.

Answer 1

Explanation:

price p1 = 20 , p2 =40

quantity q1= 100, q2=400

delta (∆)p = 40-20=20

∆q= 400-100=300

ep= ∆q/∆p ×p/q

= 300/ 20 × 20/ 100

ep = 3

it is higher than 1 which means it has higher elasticity

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