Question

A firm supplies certain quantity of a good at a price of 10 per unit. when price changes to 9 per unit , the firm supplies 10 unit less. Price elasticity of supply is 1. what is the quantity supplied before change?

Answer 1

Dear Student,

Price Elasticity of supply = Initial Price x Change in Quantity Supply
Initial Quantity Change in price
Price Elasticity of Supply = 1
Initial Price = 10
Change in Quantity Supply = -10
Change in price = -1
Initial Quantity = ? ( to be found)

1 = 10 x -10
Initial Quantity -1
Initial Quantity = 100 units

Therefore, Quantity supplied before the change is 100 units.

Regards,
Tanu jain