A firm sells 1000 units of the product at a price of Rs 10 per unit. Its elasticity of supply is 3. How many units will the firm be able to sell if the price falls to Rs 7.5 per unit?

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Solution

Given, $e_{s} = 3$

$\begin{matrix} Price & Supply 10 & 1000 7.5 & ? \end{matrix}$

$e_{s} = \frac{Δ q_{s}}{Δ p} . \frac{p}{q_{s}}$
$3 = \frac{Δ q_{s}}{- 2.50} \times \frac{10}{1000} \Rightarrow Δ q_{s} = - 750$
$∴$ New quantity supplied $= q_{s} - Δ q_{s} = 1000 - 750 = 250 u n i t s$

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A firm sells 1000 units of the product at a price of Rs 10 per unit. Its elasticity of supply is 3. How many units will the firm be able to sell if the price falls to Rs 7.5 per unit?

Given, es=3 PriceSupply 10 1000 7.5 ? es=ΔqsΔp.pqs 3=Δqs−2.50×101000⇒Δqs=−750 ∴ New quantity supplied =qs−Δqs=1000−750=250 units

Given, $e_{s} = 3$

$\begin{matrix} Price & Supply 10 & 1000 7.5 & ? \end{matrix}$

$e_{s} = \frac{Δ q_{s}}{Δ p} . \frac{p}{q_{s}}$
$3 = \frac{Δ q_{s}}{- 2.50} \times \frac{10}{1000} \Rightarrow Δ q_{s} = - 750$
$∴$ New quantity supplied $= q_{s} - Δ q_{s} = 1000 - 750 = 250 u n i t s$