Price of a good rises from Rs. 10 to Rs. 12 per unit and the producer supplies 10 per cent more. Calculate price elasticity of supply.

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Solution

Given, percentage change in quantity supplied = 10%
$P = R s .10; P_{1} = R s .12; Δ P = P_{1} - P = R s . 12 - R s . 10 = R s .2$
Percentage change in price = $\frac{Δ P}{P} \times 100$
$= \frac{2}{100} \times 100 = 20$ %
Price elasticity of supply
$(E_{s}) = \frac{Percentage change in quantity supplied}{Percenatge change in price}$
$= \frac{10}{20} = 0.5$
Price elasticity of supply = 0.5

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Price of a good rises from Rs. 10 to Rs. 12 per unit and the producer supplies 10 per cent more. Calculate price elasticity of supply.

Given, percentage change in quantity supplied = 10% P=Rs.10; P1=Rs.12; ΔP=P1−P=Rs.12−Rs.10=Rs.2 Percentage change in price = ΔPP×100 =2100×100=20% Price elasticity of supply (Es)=Percentage change in quantity suppliedPercenatge change in price =1020=0.5 Price elasticity of supply = 0.5