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At a price of Rs.25 per kg., the supply of a commodity is 10,000 kgs. per week. An increase in its price to Rs.30 per kg. increases the supply of the commodity to 12,000 kgs. per week. The elasticity of supply will be:?
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At a price of Rs.25 per kg., the supply of a commodity is 10,000 kgs. ...
Calculation of Elasticity of Supply
Elasticity of supply can be calculated using the following formula:
Elasticity of Supply = % change in quantity supplied / % change in price
To calculate the % change in quantity supplied, we use the following formula:
% change in quantity supplied = (New quantity supplied - Old quantity supplied) / Old quantity supplied x 100
Using the given data, we can calculate the % change in quantity supplied as follows:
% change in quantity supplied = (12,000 - 10,000) / 10,000 x 100 = 20%
To calculate the % change in price, we use the following formula:
% change in price = (New price - Old price) / Old price x 100
Using the given data, we can calculate the % change in price as follows:
% change in price = (30 - 25) / 25 x 100 = 20%
Substituting the values in the elasticity of supply formula, we get:
Elasticity of Supply = 20% / 20% = 1
Therefore, the elasticity of supply is 1.
Explanation of Elasticity of Supply
The elasticity of supply measures the responsiveness of the quantity supplied of a commodity to a change in its price. If the elasticity of supply is greater than 1, it means that the quantity supplied is highly responsive to changes in price, and the supply of the commodity is said to be elastic. On the other hand, if the elasticity of supply is less than 1, it means that the quantity supplied is not very responsive to changes in price, and the supply of the commodity is said to be inelastic.
In this case, the elasticity of supply is 1, which means that the quantity supplied is equally responsive to changes in price. This indicates that the supply of the commodity is neither highly elastic nor highly inelastic, but somewhere in between. Therefore, a change in price will result in a proportional change in the quantity supplied.
Elasticity of supply can be calculated using the following formula:
Elasticity of Supply = % change in quantity supplied / % change in price
To calculate the % change in quantity supplied, we use the following formula:
% change in quantity supplied = (New quantity supplied - Old quantity supplied) / Old quantity supplied x 100
Using the given data, we can calculate the % change in quantity supplied as follows:
% change in quantity supplied = (12,000 - 10,000) / 10,000 x 100 = 20%
To calculate the % change in price, we use the following formula:
% change in price = (New price - Old price) / Old price x 100
Using the given data, we can calculate the % change in price as follows:
% change in price = (30 - 25) / 25 x 100 = 20%
Substituting the values in the elasticity of supply formula, we get:
Elasticity of Supply = 20% / 20% = 1
Therefore, the elasticity of supply is 1.
Explanation of Elasticity of Supply
The elasticity of supply measures the responsiveness of the quantity supplied of a commodity to a change in its price. If the elasticity of supply is greater than 1, it means that the quantity supplied is highly responsive to changes in price, and the supply of the commodity is said to be elastic. On the other hand, if the elasticity of supply is less than 1, it means that the quantity supplied is not very responsive to changes in price, and the supply of the commodity is said to be inelastic.
In this case, the elasticity of supply is 1, which means that the quantity supplied is equally responsive to changes in price. This indicates that the supply of the commodity is neither highly elastic nor highly inelastic, but somewhere in between. Therefore, a change in price will result in a proportional change in the quantity supplied.
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At a price of Rs.25 per kg., the supply of a commodity is 10,000 kgs. per week. An increase in its price to Rs.30 per kg. increases the supply of the commodity to 12,000 kgs. per week. The elasticity of supply will be:?
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At a price of Rs.25 per kg., the supply of a commodity is 10,000 kgs. per week. An increase in its price to Rs.30 per kg. increases the supply of the commodity to 12,000 kgs. per week. The elasticity of supply will be:? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about At a price of Rs.25 per kg., the supply of a commodity is 10,000 kgs. per week. An increase in its price to Rs.30 per kg. increases the supply of the commodity to 12,000 kgs. per week. The elasticity of supply will be:? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for At a price of Rs.25 per kg., the supply of a commodity is 10,000 kgs. per week. An increase in its price to Rs.30 per kg. increases the supply of the commodity to 12,000 kgs. per week. The elasticity of supply will be:?.
At a price of Rs.25 per kg., the supply of a commodity is 10,000 kgs. per week. An increase in its price to Rs.30 per kg. increases the supply of the commodity to 12,000 kgs. per week. The elasticity of supply will be:? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about At a price of Rs.25 per kg., the supply of a commodity is 10,000 kgs. per week. An increase in its price to Rs.30 per kg. increases the supply of the commodity to 12,000 kgs. per week. The elasticity of supply will be:? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for At a price of Rs.25 per kg., the supply of a commodity is 10,000 kgs. per week. An increase in its price to Rs.30 per kg. increases the supply of the commodity to 12,000 kgs. per week. The elasticity of supply will be:?.
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