Question

When the market price of cheese rises from Rs 20 per kgto Rs 21 per kg,a producer expands his supply from 3000 kg to 3500 kg. calculate his price elasticity of supply.

Answer 1

p=20. ∆P=P1-P=21-20=1
p1=21. ∆Q=Q1-Q=3500-3000
Qs =3000. =500
Qs1= 3500
Es =P/Q ×∆Q/∆P
=20/3000× 500/1
=10/3
=3.33