A $10$ percent rise in the price of a commodity raises its supply from $200$ units to $225$ units. Calculate its price elasticity of supply.

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Solution

Given percentage change in price $= 10$ percent

$Q = 200 u n i t s; Q_{1} = 225 u n i t s;$

$Δ Q = Q_{1} - Q = 225 - 200) = 25 u n i t s$

Percentage change in quantity supplied $= \frac{Δ Q}{Q} \times 100 = \frac{25}{200} \times 100 = 12.5 p e r c e n t$

Price elasticity of supply $E_{s} = \frac{P e r c e n t a g e c h a n g e i n q u a n t i t y s u p p l i e d}{P e r c e n t a g e c h a n g e i n p r i c e} = \frac{12.5 p e r c e n t}{10 p e r c e n t} = 1.25$ percent

Price elasticity of supply $= 1.25$

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A 10 percent rise in the price of a commodity raises its supply from 200 units to 225 units. Calculate its price elasticity of supply.

A $10$ percent rise in the price of a commodity raises its supply from $200$ units to $225$ units. Calculate its price elasticity of supply.