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A Firm Earns a Revenue of Rs 50 When the Market Price of a Good is Rs 10. the Market Price Increase to Rs 15 and the Firm Now Earns a Revenue of Rs 150. - Economics

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Sum

A firm earns a revenue of Rs 50 when the market price of a good is Rs 10. The market price increase to Rs 15 and the firm now earns a revenue of Rs 150. What is the price elasticity of the firm’s supply curve?

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Solution

At Price, P1 = Rs 10

Total Revenue, TR1 = P1 × Q1 = 50

`rArr("TR"_1)/P_1=Q_1`

`rArr50/10=Q_1`

⇒ Q1 = 5 units

At Price, P2 = Rs 15

Total Revenue, TR2 = P2 × Q2 = 150

`rArrQ_2=("TR"_2)/P_2`

`rArrQ_2=150/15`

⇒ Q2 = 10 units

Elasticity of supply, `e_s=(DeltaQ)/(DeltaP)xxP/Q`

ΔQ = Q2 − Q1 = 10 − 5 = 5

P = P1 − P= 15 − 10 = 5

`e_s=5/5xx10/5`

es= 2

Concept: Price Elasticity of Supply
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APPEARS IN

NCERT Class 11 Economics Introductory Microeconomics
Chapter 4 The Theory Of The Firm Under Perfect Competition
Exercise | Q 25 | Page 70
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