At a price of Rs 40 per unit, the quantity supplied of a commodity is 400 units When it's - Economics - Theory of Consumer Behaviour

Question

At a price of Rs 40 per unit, the quantity supplied of a commodity
is 400 units When it's price falls by 10 percent, its quantity
supplied falls by 30 units Calculate it's elasticity of supply Is
it supply elastic Give reasons for your answer

Lakshay Singhal · Accepted Answer

Dear Student,

Price
(â‚¹)
Quantity

Old
40
400

New
36 (90% of 40)
370 (400-30)

Elasticity of supply =
change in quantitychange in price x
Old PriceOld Quantity
= -30-4 x 40400
= 0 75
Hence elasticity is less than 1 It is inelastic

Regards

At a price of Rs 40 per unit, the quantity supplied of a commodity is 400 units. When it's price falls by 10 percent, its quantity supplied falls by 30 units. Calculate it's elasticity of supply. Is it supply elastic Give reasons for your answer.