when the price of a good Rises from rupees 20 per unit to RS 30 per unit and the revenue of the firm rises from rupees 100 Rs 200. calculate price elasticity of supply
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Explanation:
ANSWER
Given P=Rs.5;P
1
=Rs.10;
ΔP=P
1
−P=Rs.10−Rs.5=Rs.5
When price =Rs.5, total revenue (P×Q)=Rs.50
Quantity supplied Q=
5
50
=10units
When price =Rs.10, total revenue (P
1
×Q
1
)=Rs.100
New quantity supplied Q
1
=
10
100
=10units
Q=10units;Q
1
=10units;
ΔQ=Q
1
−Q=(10−10)=0units
Price elasticity of supply E
s
=
Q
P
×
ΔP
ΔQ
=
10
5
×
5
0
=0
Price elasticity of supply =0 (zero)
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