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When Price Falls by Rs 2 per Unit, Supply Falls from 100 Units to 80 Units. Price Elasticity of Supply is 2. What Was the Price per Unit before Change?Calculate. - Economics

Question

When price falls by Rs 2 per unit, supply falls from 100 units to 80 units. Price elasticity of supply is 2. What was the price per unit before change?Calculate.

Solution

Given that

Actualquantity(Q) = 100, New quantity supplied(Q1) = 80 and Es = 2

Change in price (ΔP) = 2

ΔQ = Q1 - Q

= 80 - 100 = (-)20

"Price elasticity of supply"(E_s)=(DeltaQ)/(DeltaP)xxP/Q

2=((-)20)/2xx?/100

P = (-)20

Initially, the pricewas Rs 20 per unit i.e. before the quantity change.

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