When price of a commodity falls from Rs 12 per unit to Rs 9 per unit, the producer supplies 75 percent less output. Calculate price elasticity of supply

Solution

Given that
$straight P subscript 0 space equals space Rs space 12 comma space space straight P subscript 1 space equals space Rs space 9$
Percentage change in quantity supplied = (-) 75%
$Change space in space price space left parenthesis increment straight P right parenthesis space equals space straight P subscript 1 minus straight P subscript 0 space equals 9 minus 12 space equals space left parenthesis negative 3 right parenthesis$
$Percentage space change space in space price space equals space fraction numerator increment straight P over denominator straight P subscript 0 end fraction cross times 100 space space space space space space space space space space space space space space space space space space space space space space space space space space space space space space space space space space space space space equals fraction numerator left parenthesis negative 3 right parenthesis over denominator 12 end fraction cross times 100 space equals space minus 25 percent sign$
$Price space elasticity space of space supply space left parenthesis straight E subscript straight s right parenthesis space equals space fraction numerator percent sign space change space in space quanity space supplied over denominator percent sign space change space in space price end fraction equals fraction numerator left parenthesis negative 75 right parenthesis percent sign over denominator left parenthesis negative 25 right parenthesis percent sign end fraction equals 3$

Some More Questions From The Theory Of The Firm Under Perfect Competition Chapter

For Daily Free Study Material Join wiredfaculty

The Theory Of The Firm Under Perfect Competition

When price of a commodity falls from Rs 12 per unit to Rs 9 per unit, the producer supplies 75 percent less output. Calculate price elasticity of supply

Some More Questions From The Theory Of The Firm Under Perfect Competition Chapter

Name the market structure in which firm is itself an industry.

Define the term market as used in economics.

What is meant by monopolistic competition?

What are selling costs?

Define homogeneous product.

What is meant by differentiated product?

Define perfect competition.

Is the seller under perfect competition a price maker or a price taker?

Define monopoly.

Define market equilibrium.

Mock Test Series

NCERT Sample Papers

Entrance Exams Preparation

Phone Number

Email Address

Loaction