Question

The supply of a commodity at a price of Rs. 20 per unit is 500 units. A 10 per cent rise in its price results in a 15 per cent rise in its supply. Calculate the price elasticity of supply.​

Answer 1

Answer:

Given percentage change in price =10 percent

Q=200units;Q

1

=225units;

ΔQ=Q

1

−Q=225−200)=25units

Percentage change in quantity supplied =

Q

ΔQ

×100=

200

25

×100=12.5percent

Price elasticity of supply E

s

=

Percentagechangeinprice

Percentagechangeinquantitysupplied

=

10percent

12.5percent

=1.25 percent

Price elasticity of supply =1.25