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If Rs. 20% fall in the price brings about a 10% fall in the quantity supplied, then the elasticity of supply will be equal to:
- a)2.0
- b)0.5
- c)1.0
- d)1.5
Correct answer is option 'B'. Can you explain this answer?
Verified Answer
If Rs. 20% fall in the price brings about a 10% fall in the quantity s...
Correct answer is Option B.
Explanation:
The elasticity of supply measures the responsiveness of the quantity supplied to changes in the price of the good. It is calculated using the following formula:
Elasticity of Supply (EoS) = (% change in quantity supplied) / (% change in price)
In this case, we are given:
- A 20% fall in the price (which is a -20% change in price)
- A 10% fall in the quantity supplied (which is a -10% change in quantity supplied)
Now, we can calculate the elasticity of supply:
EoS = (-10%) / (-20%)
EoS = 0.5
Therefore, the elasticity of supply in this case is equal to 0.5, which is option b. This value indicates that the quantity supplied is relatively inelastic with respect to the price. In other words, a change in the price of the good results in a smaller percentage change in the quantity supplied.
Elasticity of Supply (EoS) = (% change in quantity supplied) / (% change in price)
In this case, we are given:
- A 20% fall in the price (which is a -20% change in price)
- A 10% fall in the quantity supplied (which is a -10% change in quantity supplied)
Now, we can calculate the elasticity of supply:
EoS = (-10%) / (-20%)
EoS = 0.5
Therefore, the elasticity of supply in this case is equal to 0.5, which is option b. This value indicates that the quantity supplied is relatively inelastic with respect to the price. In other words, a change in the price of the good results in a smaller percentage change in the quantity supplied.
Most Upvoted Answer
If Rs. 20% fall in the price brings about a 10% fall in the quantity s...
Correct answer is Option B.
Explanation:
The elasticity of supply measures the responsiveness of the quantity supplied to changes in the price of the good. It is calculated using the following formula:
Elasticity of Supply (EoS) = (% change in quantity supplied) / (% change in price)
In this case, we are given:
- A 20% fall in the price (which is a -20% change in price)
- A 10% fall in the quantity supplied (which is a -10% change in quantity supplied)
Now, we can calculate the elasticity of supply:
EoS = (-10%) / (-20%)
EoS = 0.5
Therefore, the elasticity of supply in this case is equal to 0.5, which is option b. This value indicates that the quantity supplied is relatively inelastic with respect to the price. In other words, a change in the price of the good results in a smaller percentage change in the quantity supplied.
Elasticity of Supply (EoS) = (% change in quantity supplied) / (% change in price)
In this case, we are given:
- A 20% fall in the price (which is a -20% change in price)
- A 10% fall in the quantity supplied (which is a -10% change in quantity supplied)
Now, we can calculate the elasticity of supply:
EoS = (-10%) / (-20%)
EoS = 0.5
Therefore, the elasticity of supply in this case is equal to 0.5, which is option b. This value indicates that the quantity supplied is relatively inelastic with respect to the price. In other words, a change in the price of the good results in a smaller percentage change in the quantity supplied.
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Community Answer
If Rs. 20% fall in the price brings about a 10% fall in the quantity s...
Calculation of Elasticity of Supply:
1. **Formula for Elasticity of Supply:**
- The formula for calculating the elasticity of supply is:
\[ \text{Elasticity of Supply} = \frac{\% \text{ change in quantity supplied}}{\% \text{ change in price}} \]
2. **Given Data:**
- Price falls by 20%
- Quantity supplied falls by 10%
3. **Calculation:**
- Using the formula:
\[ \text{Elasticity of Supply} = \frac{-10\%}{-20\%} = \frac{1}{2} = 0.5 \]
4. **Interpretation:**
- An elasticity of supply of 0.5 indicates that for a 1% decrease in price, the quantity supplied will decrease by 0.5%.
Therefore, the elasticity of supply in this scenario is 0.5, which is represented by option 'B'.
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If Rs. 20% fall in the price brings about a 10% fall in the quantity supplied, then the elasticity of supply will be equal to:a)2.0b)0.5c)1.0d)1.5Correct answer is option 'B'. Can you explain this answer?
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