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Question
When price falls by Rs 2 per unit, supply falls from 100 units to 80 units. Price elasticity of supply is 2. What was the price per unit before change?Calculate.
Solution
Given that
Actualquantity(Q) = 100, New quantity supplied(Q1) = 80 and Es = 2
Change in price (ΔP) = 2
ΔQ = Q1 - Q
= 80 - 100 = (-)20
`"Price elasticity of supply"(E_s)=(DeltaQ)/(DeltaP)xxP/Q`
`2=((-)20)/2xx?/100`
P = (-)20
Initially, the pricewas Rs 20 per unit i.e. before the quantity change.
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