Total Revenue is Rs 400 When the Price of the Commodity is Rs 2 per Unit. When Price Rises to Rs 3 per Unit, the Quantity Supplied is 300 Units. Calculate the Price Elasticity of Supply - Economics

Total revenue is Rs 400 when the price of the commodity is Rs 2 per unit. When price rises to Rs 3 per unit, the quantity supplied is 300 units. Calculate the price elasticity of supply.

Solution

 Price  (P) Total Revenue          (TR) Quantity Supplied           (QS) 2 400 200 3 - 300

ΔQ_s=300-200=100

ΔP=3-2=1

E_s=(ΔQ)/(ΔP)xxp/q=100/1xx2/200

∴E_s=1

Concept: Measurement of Price Elasticity of Supply - Percentage-change Method
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