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The price elasticity of supply of a commodity is 2.5 . At a price of 5rs per unit, its quantity supplied is 300 units. Calculate its quantity supplied at a price of 4rs per unit. |
Answer» Solution : Price Elasticity of Supply (ES) `=(DeltaQ)/(DeltaP)xx(P)/(Q)` `=2.5=(DeltaQ)/(1)xx(5)/(300)`, i.e., `DeltaQ=150` As price decreases, then quantity SUPPLIED will ALSO decrease. It means, New Quantity =ORIGINAL Quantity (Q)-CHANGE in Quantity `(DeltaQ]` =`300-150=150` units New Quantity `=150` units |
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