A firm earns a revenue of Rs 60 when the price is Rs 10. When the price increases to Rs 15, the revenue becomes Rs 120. What is the elasticity of supply?

0.33

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0.66

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1.5

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Solution

The correct option is B
0.66

When p= Rs 10, TR = Rs 60
$T R = p \times q_{0} 60 = 10 \times q_{0} q_{0} = 6$

When p = Rs 15, TR = Rs 120
$120 = 15 \times q_{1} q_{1} = 8$

$ϵ_{s} = \frac{Δ q}{Δ p} \times \frac{p_{0}}{q_{0}} = \frac{2}{5} \times \frac{10}{6} = \frac{4}{6} = \frac{2}{3} = 0.66$

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A firm earns a revenue of Rs 60 when the price is Rs 10. When the price increases to Rs 15, the revenue becomes Rs 120. What is the elasticity of supply?

The correct option is B 0.66 When p= Rs 10, TR = Rs 60 TR=p×q060=10×q0q0=6 When p = Rs 15, TR = Rs 120 120=15×q1q1=8 ϵs=ΔqΔp×p0q0=25×106=46=23=0.66

The correct option is B
0.66

When p= Rs 10, TR = Rs 60
$T R = p \times q_{0} 60 = 10 \times q_{0} q_{0} = 6$

When p = Rs 15, TR = Rs 120
$120 = 15 \times q_{1} q_{1} = 8$

$ϵ_{s} = \frac{Δ q}{Δ p} \times \frac{p_{0}}{q_{0}} = \frac{2}{5} \times \frac{10}{6} = \frac{4}{6} = \frac{2}{3} = 0.66$