What is perfectly elastic supply? When price falls by $R s . 2$ per unit, supply falls from $100$ units to $80$ units. Price elasticity of supply is $2$ . What was the price per unit before change? Calculate.

Open in App

Solution

Perfectly elastic supply is a situation of an infinite change in quantity supplied owing to very small change in price. $E_{S} = \infty$ . It is indicated by a horizontal straight line supply curve.
Suppose the price before change was $R s . X$ .
Given, $P = R s . X; △ P = (-) R s . 2$
$Q = 100 u n i t s; Q_{1} = 80 u n i t s; △ Q = (80 - 100) u n i t s = (-) 20 u n i t s$
$E_{S} = 2$
Price elasticity of supply $(E_{S}) = \frac{P}{Q} \times \frac{△ Q}{△ P}$
$2 = \frac{X}{100} \times \frac{- 20}{- 2}$
$\Rightarrow 2 = \frac{X}{100}$
$\Rightarrow X = 20$
Price before change was $R s . 20$ .

Suggest Corrections

Similar questions

Q. When price of a good rises from

R s . 8

per unit to

R s . 10

per unit, producer supplies

40

units more. Price elasticity of supply is

2

. What is the quantity supplied before the price change? Calculate.

Q. When price of a good falls from

R s . 20

R s . 10

per unit, producer reduces supply from

100

units to

50

units. Calculate price elasticity of supply.

Q. The price elasticity of supply of a good is

4

. When its price falls from Rs. 10 per unit to Rs. 8 per unit, its quantity supplied falls by 400 units. Calculate the new quantity at the reduced price.

When the price of a good rises from Rs. 8 per unit to Rs. 10 per unit, the producer supplies 40 more units. Price elasticity of supply is 2. What is the quantity supplied before the price change? Calculate.

Q. When the price of a commodity changes from Rs.

4

per unit to Rs.

5

unit, its market supply rises from

100

units to

120

units. Calculate price elasticity of supply. Is supply elastic? Give reason.

Join BYJU'S Learning Program

What is perfectly elastic supply? When price falls by Rs.2 per unit, supply falls from 100 units to 80 units. Price elasticity of supply is 2. What was the price per unit before change? Calculate.

What is perfectly elastic supply? When price falls by $R s . 2$ per unit, supply falls from $100$ units to $80$ units. Price elasticity of supply is $2$ . What was the price per unit before change? Calculate.