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When price of a commodity falls by just 10% ,the total revenue of a firm becomes half of the original total revenue. If at the new price if Rs. 45 only 10 units are supplied. Calculate the original quantity and price elasticity of supply. (a) 18;4.4 (b) 16;4.4 (c) 18;5.4 (d) 16;5.4?
Most Upvoted Answer
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.
Community Answer
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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When price of a commodity falls by just 10% ,the total revenue of a firm becomes half of the original total revenue. If at the new price if Rs. 45 only 10 units are supplied. Calculate the original quantity and price elasticity of supply. (a) 18;4.4 (b) 16;4.4 (c) 18;5.4 (d) 16;5.4?
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When price of a commodity falls by just 10% ,the total revenue of a firm becomes half of the original total revenue. If at the new price if Rs. 45 only 10 units are supplied. Calculate the original quantity and price elasticity of supply. (a) 18;4.4 (b) 16;4.4 (c) 18;5.4 (d) 16;5.4? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about When price of a commodity falls by just 10% ,the total revenue of a firm becomes half of the original total revenue. If at the new price if Rs. 45 only 10 units are supplied. Calculate the original quantity and price elasticity of supply. (a) 18;4.4 (b) 16;4.4 (c) 18;5.4 (d) 16;5.4? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for When price of a commodity falls by just 10% ,the total revenue of a firm becomes half of the original total revenue. If at the new price if Rs. 45 only 10 units are supplied. Calculate the original quantity and price elasticity of supply. (a) 18;4.4 (b) 16;4.4 (c) 18;5.4 (d) 16;5.4?.
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