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When Price of a Good Falls from Rs 20 to Rs 10 per Unit, Producer Reduces Supply from 100 Units to 50 Units. Calculate Price Elasticity of Supply. - Economics

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When price of a good falls from Rs 20 to Rs 10 per unit, producer reduces supply from 100 units to 50 units. Calculate price elasticity of supply.

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Solution

Given that
Q0 = 100 units and Q1 = 50 units

P0 = Rs 20 and P1 =Rs 10

ΔP = P1 - P0

ΔP=10-20=-10

ΔQ = Q1 - Q0

ΔQ = 50 - 100=-50 units

We know that

`E_s = (DeltaQ)/(DeltaP)xxP_0/Q_0`

`=(-50)/-10xx20/100`

`=5xx1/5=1`

Concept: Concept of Supply
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