Question

When the price of a commodity changes from ₹ 4 per unit to ₹ 5 per unit, its market supply rises from 100 units to 120 units. Calculate the price elasticity of supply. Is supply elastic? Give reason.

Answer 1

price elasticity of supply=0.8
It is inelastic because es<1

Answer 2

P= rs 4

P1= rs 5

Q= 100

Q1= 120

Change in price = 5-4=1

Change in quantity supplied= 120-100=20

Elasticity of supply = 20/1*4/100= 0.8

Therefore elasticity of supply = 0.8