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Question
Price of a product increases by 2%. As a result, its supply rises by 4%. What is elasticity of supply of the commodity?
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Solution
Elasticity of Supply (Es) = `("Percentage change in quantity supplied")/("Percentage change in price")`
Percentage change in price = 2%
Percentage change in quantity supplied = 4%
Es = `(4%)/(2%)`
= 2
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