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Question
When price of a good raises from Rs 12 per unit to Rs 15 per unit the producer supplies 50 per cent more output. What is the price elasticity of supply? Calculate.
Solution
Given that
Percentage change in quanity supplied is 50
P=Rs12 and P1 = Rs 15
ΔP = P1-P
=15-12
=3
Percentage change in price =`(DeltaP)/Pxx100`
`=3/12xx100=25%`
Price elasticity of supply`(E_s)="percentage change in quantity supplied"/"Percentage change in price"`
`=(50%)/(25%)= 2`
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