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Login10. When the price of a commodity changes from 4 per unit to 5 per unit, its market supply rises from 100 unitsto 120 units. Calculate the price elasticity of demand. Issupply elastic ? Give reason.
Economy Primary School in Economy 1 year ago
Price elasticity of supply = % CHANGE in quantity supplied / % change in priceTherefore, Price elasticity of supply= ((120-100)/(120+100))*( (5-4)/(5+4)) = 0.80Since, price elasticity of supply is less than 1, supply of this COMMODITY is inelastic. This means that a SHIFT in price won't DRASTICALLY affect the supply of the commodity.Explanation:
Posted on 08 Sep 2024, this text provides information on Economy related to Primary School in Economy. Please note that while accuracy is prioritized, the data presented might not be entirely correct or up-to-date. This information is offered for general knowledge and informational purposes only, and should not be considered as a substitute for professional advice.
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