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A Firm Supplies 10 Units of a Good at a Price of Rs 5 per Unit. Price Elasticity of Supply is 1.25. What Quantity Will the Firm Supply at a Price of Rs 7 per Unit? - CBSE (Commerce) Class 12 - Economics

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Question

A firm supplies 10 units of a good at a price of Rs 5 per unit. Price elasticity of supply is 1.25. What quantity will the firm supply at a price of Rs 7 per unit?

Solution

As given in the question,
Qs = 10, P = 5 and Es = 1.25
At new price of Rs 7 per unit
ΔP = 7 - 5 = 2
We know,
`E_s=(ΔQ)/(ΔP)xxP/Q`

or, `1.25=(ΔQ)/2xx5/10`

or, ΔQ = 1.25 x 4 = 5

Thus, the new quantity that the firm would supply at a price of Rs 7 per unit is 15 (5+10).

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Solution A Firm Supplies 10 Units of a Good at a Price of Rs 5 per Unit. Price Elasticity of Supply is 1.25. What Quantity Will the Firm Supply at a Price of Rs 7 per Unit? Concept: Concept of Supply.
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