Question

A seller sells 100 units of a commodity when its price per unit is ₹ 10. The supply goes up to 140 units as a result of an increase in its price to ₹ 12 per unit. Calculate the price elasticity of supply.

Answer 1

Change in quantity supplied = 140 − 100

= 40 units

Percentage change in quantity supplied = `40/100 xx 100`

= 40%

Change in price = 12 − 10

= ₹ 2

Percentage change in price = `2/10 xx 100`

= 20%

`e_s = "Proportionate Change in Quantity Supplied"/ "Proportionate Change in Price"`

= `40/20`

= 2

Price Elasticity of Supply = 2

Since E_S > 1, the supply is said to be elastic.