The price of a commodity is Rs 100 per unit and quantity supplied at this price is 500 units. If its price falls by 10 percent and quantity supplied falls to 400 units. Calculate its price elasticity.

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Solution

$\begin{matrix} Price & 10 & 10 % Quantity supplied & 500 & 400 \end{matrix}$

$%$ change in price $= 10 %$

$%$ change in quantity supplied $= (\frac{change in Q}{Q}) \times 100 = (\frac{100}{500}) \times 100 = 20 %$

Therefore, $E_{s} = \frac{% change in quantity supplied}{% change in price} = \frac{20 %}{10 %} = 2$ .

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The price of a commodity is Rs 100 per unit and quantity supplied at this price is 500 units. If its price falls by 10 percent and quantity supplied falls to 400 units. Calculate its price elasticity.

Price1010%Quantity supplied500400 % change in price =10% % change in quantity supplied =(change in QQ)×100=(100500)×100=20% Therefore, Es=%change in quantity supplied%change in price=20%10%=2.