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What is the elasticity of supply, when price changes from Rs. 15 to Rs. 12 and supply change from 6 units to 5 units?
  • a)
    0.77
  • b)
    0.87
  • c)
    0.833
  • d)
    0.58
Correct answer is option 'C'. Can you explain this answer?
Verified Answer
What is the elasticity of supply, when price changes from Rs. 15 to Rs...
Ans.

Method to Solve :
No, the supply is not elastic. It is inelastic because price elasticity of supply is less than one.
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What is the elasticity of supply, when price changes from Rs. 15 to Rs...
Elasticity of supply is a measure of the responsiveness of the quantity supplied of a good to changes in its price. It is calculated as the percentage change in quantity supplied divided by the percentage change in price.

Given:
Initial price (P1) = Rs. 15
New price (P2) = Rs. 12
Change in price (ΔP) = P2 - P1 = 12 - 15 = -3
Initial quantity supplied (Q1) = 6 units
New quantity supplied (Q2) = 5 units
Change in quantity supplied (ΔQ) = Q2 - Q1 = 5 - 6 = -1

Using the formula for elasticity of supply:
Elasticity of supply = (ΔQ/Q1) / (ΔP/P1)

Substituting the values:
Elasticity of supply = (-1/6) / (-3/15)
Elasticity of supply = 0.833

Therefore, the elasticity of supply when price changes from Rs. 15 to Rs. 12 and supply changes from 6 units to 5 units is 0.833.
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What is the elasticity of supply, when price changes from Rs. 15 to Rs...
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What is the elasticity of supply, when price changes from Rs. 15 to Rs. 12 and supply change from 6 units to 5 units?a)0.77b)0.87c)0.833d)0.58Correct answer is option 'C'. Can you explain this answer?
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