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.

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Solution

Given, P= Rs. 8; $P_{1} = R s . 10;$
$Δ P = P_{1} - P$ = Rs. 10 - Rs. 8 = Rs. 2
Q = X units; $Q_{1} = (X + 40)$ units; $Δ Q = 40$ unit
$E_{s} = 2$
Price elasticity of supply $(E_{s}) = \frac{P}{Q} \times \frac{Δ Q}{Δ P}$
$2 = \frac{8}{X} \times \frac{40}{2}$
$\Rightarrow 2 = \frac{160}{X}$
$\Rightarrow 2 X = 160$
$\Rightarrow X = \frac{160}{2} = 80$
Before the price change, quantity supplied = 80 units.

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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.

Given, P= Rs. 8; P1=Rs.10; ΔP=P1−P = Rs. 10 - Rs. 8 = Rs. 2 Q = X units; Q1=(X+40) units; ΔQ=40 unit Es=2 Price elasticity of supply (Es)=PQ×ΔQΔP 2=8X×402 ⇒2=160X ⇒2X=160 ⇒X=1602=80 Before the price change, quantity supplied = 80 units.