Question

At a price of ₹8 per unit, the quantity supplied of a commodity is 200 units. It’s price elasticity is equal to 1.5. If its price rises to ₹10 per unit, calculate its quantity supplied at the new price.

Answer 1

Given, e_s = 1.5, P = 8, Q = 200, P₁ = 10,

e_{s =} `(ΔQ)/(ΔP) xx P/Q `

⇒ 1.5 = `(ΔQ)/(10-8) xx 8/200`

⇒ 1.5 = `(ΔQ)/(2) xx 8/200`

⇒ 1.5 = `(ΔQ)/50`

⇒ ΔQ = 1.5 × 50 = 75

New quantity supplied = 200 + 75

= 275 units