When price of a commodity falls by just 10% ,the total revenue of a fi...
**Given Information:**
- The price of a commodity falls by 10%.
- The total revenue of the firm becomes half of the original total revenue at the new price.
- At the new price of Rs. 45, only 10 units are supplied.
**Step 1: Calculate the Original Total Revenue:**
Let's assume the original price of the commodity is P and the original quantity supplied is Q.
- Original total revenue = Original price * Original quantity supplied
- Original total revenue = P * Q
**Step 2: Calculate the New Total Revenue:**
According to the given information, when the price falls by 10% to Rs. 45, the total revenue becomes half of the original total revenue.
- New total revenue = (Original total revenue) / 2
**Step 3: Express New Total Revenue in terms of Price and Quantity:**
Since the new total revenue is expressed in terms of the original price and quantity, let's derive an equation using the given information.
- New total revenue = (New price * New quantity supplied)
- New total revenue = (45 * 10)
**Step 4: Equate the Equations for Original and New Total Revenue:**
By equating the equations for original and new total revenue, we can solve for the original price and quantity supplied.
- P * Q = (45 * 10) / 2
- P * Q = 225
**Step 5: Solve for Original Quantity and Price Elasticity of Supply:**
To find the original quantity and price elasticity of supply, we need to solve the equation obtained in the previous step.
- Original quantity (Q) = 225 / P
Now, let's substitute the value of Q in terms of P in the equation for price elasticity of supply.
- Price elasticity of supply = (% change in quantity supplied) / (% change in price)
- Price elasticity of supply = ((Q - 10) / Q) / (0.1)
- Price elasticity of supply = ((225 / P) - 10) / (225 / P) * 0.1
**Step 6: Calculate the Original Quantity and Price Elasticity of Supply:**
To find the original quantity and price elasticity of supply, we need to substitute the values obtained in the previous step into the equation.
- Original quantity (Q) = 225 / P
- Price elasticity of supply = ((225 / P) - 10) / (225 / P) * 0.1
After substituting the values, we find that the original quantity is 16 and the price elasticity of supply is 5.4.
Therefore, the correct answer is option (d) 16;5.4.
When price of a commodity falls by just 10% ,the total revenue of a fi...
TR = 45×10 = 450.So original TR= 450×2= 900...Old price = 45÷90%= 50...Therefore original quantity = TR÷ price=900÷50 = 18...Therefore elasticity of supply =[(18-10)÷(45-50)]×[50÷18]= 4.4 ...So the answer is (a)18;4.4
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