A firm's revenue rises from Rs. 400 to Rs. 500 when the price of its products rises from Rs. 20 per unit to Rs. 25 per unit. Calculate the price elasticity of supply.
Given, P= Rs. 20; P1= 25;
Δ=P1−P = Rs. 25 - Rs. 20 = Rs. 5
When price = Rs. 20, total revenue (P×Q)=Rs. 400
∴ Quantity supplied(Q) =40020=20units
When price =25, total revenue (P1×Q1) =500
∴ New quantity supplied (Q1)=50025=20units
Q= 20 units; Q1=20units
ΔQ=Q1−Q=(20−20)units=0units
Price elasticity of supply (Es)=PQ×ΔQΔP=2020×05=0
Price elasticity of supply =0 (zero).