When price of a good rises from $R s . 10$ to $R s . 12$ per unit, the producer supplies $10$ per cent more. Calculate price elasticity of supply.

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Solution

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

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When price of a good rises from Rs.10 to Rs.12 per unit, 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;△P=P1−P=Rs.12−Rs.10=Rs.2Percentage change in price =△PP×100=210×100=20%Price elasticity of supply (ES)=Percentage change in quantity suppliedPercentage change in price=10%20%=0.5Price elasticity of supply =0.5.

When price of a good rises from $R s . 10$ to $R s . 12$ per unit, the producer supplies $10$ per cent more. Calculate price elasticity of supply.