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When the Price of a Good Rises from Rs 20 per Unit to Rs 30 per Unit, the Revenue of the Firm Producing this Good Rises from Rs 100 to Rs 300. Calculate the Price Elasticity of Supply. - Economics

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When the price of a good rises from Rs 20 per unit to Rs 30 per unit, the revenue of the firm producing this good rises from Rs 100 to Rs 300. Calculate the price elasticity of supply.

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Solution

Given that

P1 = 20

P2 = 30

ΔP = 30 - 20 =10

Now

TR1 = 100

TR2 = 300

Q1 = TR1/P1 = 100/20 = 5

Q2 = TR2/P2 = 300/30 = 10

Thus

`DeltaQ=(10-5)=5`

`E_d((DeltaQ)/Qxx100)/((DeltaP)/Pxx100)=(5/5)/(10/20)1/(1/2)=2`

 

Concept: Concept of Supply
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