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Q. If the price of Banana rises from Rs. 30 per dozen to Rs. 40 per dozen and the supply increases from 240 dozen to 300 dozens elasticity of supply is:
- a).7
- b)-.67
- c).65
- d).77
Correct answer is option 'D'. Can you explain this answer?
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Q. If the price of Banana rises from Rs. 30 per dozen to Rs. 40 per do...
Elasticity of Supply Calculation:
Elasticity of supply is the measure of the responsiveness of the quantity supplied of a good or service to a change in its price. It is calculated as the percentage change in quantity supplied divided by the percentage change in price.
Elasticity of Supply = (% Change in Quantity Supplied) / (% Change in Price)
Given:
Initial Price (P1) = Rs. 30 per dozen
Final Price (P2) = Rs. 40 per dozen
Initial Supply (Q1) = 240 dozen
Final Supply (Q2) = 300 dozen
Percentage Change in Quantity Supplied:
% Change in Quantity Supplied = ((Q2 - Q1) / Q1) x 100
% Change in Quantity Supplied = ((300 - 240) / 240) x 100
% Change in Quantity Supplied = 25%
Percentage Change in Price:
% Change in Price = ((P2 - P1) / P1) x 100
% Change in Price = ((40 - 30) / 30) x 100
% Change in Price = 33.33%
Elasticity of Supply:
Elasticity of Supply = (% Change in Quantity Supplied) / (% Change in Price)
Elasticity of Supply = 25% / 33.33%
Elasticity of Supply = 0.75
Therefore, the elasticity of supply is 0.75 or 0.77 (approx.) which indicates that the supply of bananas is relatively elastic. A change in price has a proportional change in supply.
Elasticity of supply is the measure of the responsiveness of the quantity supplied of a good or service to a change in its price. It is calculated as the percentage change in quantity supplied divided by the percentage change in price.
Elasticity of Supply = (% Change in Quantity Supplied) / (% Change in Price)
Given:
Initial Price (P1) = Rs. 30 per dozen
Final Price (P2) = Rs. 40 per dozen
Initial Supply (Q1) = 240 dozen
Final Supply (Q2) = 300 dozen
Percentage Change in Quantity Supplied:
% Change in Quantity Supplied = ((Q2 - Q1) / Q1) x 100
% Change in Quantity Supplied = ((300 - 240) / 240) x 100
% Change in Quantity Supplied = 25%
Percentage Change in Price:
% Change in Price = ((P2 - P1) / P1) x 100
% Change in Price = ((40 - 30) / 30) x 100
% Change in Price = 33.33%
Elasticity of Supply:
Elasticity of Supply = (% Change in Quantity Supplied) / (% Change in Price)
Elasticity of Supply = 25% / 33.33%
Elasticity of Supply = 0.75
Therefore, the elasticity of supply is 0.75 or 0.77 (approx.) which indicates that the supply of bananas is relatively elastic. A change in price has a proportional change in supply.
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Q. If the price of Banana rises from Rs. 30 per dozen to Rs. 40 per do...
Correct Answer is 0.75
60/10 × 30/240 = 0.75
60/10 × 30/240 = 0.75
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Q. If the price of Banana rises from Rs. 30 per dozen to Rs. 40 per dozen and the supply increases from 240 dozen to 300 dozens elasticity of supply is:a).7b)-.67c).65d).77Correct answer is option 'D'. Can you explain this answer?
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