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प्रश्न
How is elasticity of supply measured according to percentage method?
उत्तर
Percentage Method:
According to percentage method, elasticity of supply (Es) is the ratio between percentage change in quantity supplied and percentage change in price of the commodity. In fact, this method originated from the definition of price elasticity of supply itself.
Price elasticity of supply = `("Percentage change in quantity supplied")/("Percentage change in its Price")`
Percentage Change in quantity supplied = `(ΔQ)/Qxx100`
Percentage change in price = `(ΔP)/Pxx100`
Now the percentage formula can be written as
Es= `((ΔQ)/Qxx100)/((ΔP)/Pxx100)`
Cancelling out 100 by 100, we get
Es = `((ΔQ)/Q)/((ΔP)/P)`
When Q = initial quantity
P Initial price
ΔQ = Change in quantity supplied
ΔP = Change in price of the commodity
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