Question

The price of elasticity of supply of a commodity is 2. When its price Falls from ₹10 per unit to ₹8 per unit, its quantity supplied Falls by 500 units.Calculate the quantity supplied at the reduced price.​

Answer 1

750 will be your answer

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Answer 2

750 units is the quantity supplied at the reduced price.

• Price Elasticity of supply refers to the responsiveness or change in the supply of a commodity with a given change in its price.
• Formula for the calculation of price elasticity of supply is $e_{s} =$(Δq/q)* (p/Δp).
• Given,

$e_{s}=2$

p1=10

p2=8

Δp=2

Δq=500

Let q1=x

∴q2 = x-500

putting the values in formula

$e_{s}=$(Δq/q)* (p/Δp)

2= (500/x)*(10/2)

2= (500/x)*5

x=2500/2

x=1250

∴ q2=x-500=1250-500=750 units