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InterviewSolution
| 1. |
12.) Due to 10% rise in the price of a commodity, its quantitysupplied rises from 400 units to 450 units. Calculate itsprice elasticity of supply. Is its supply elastic ? |
| Answer» 1.25 , YES , GQExplanation:% change in quantity SUPPLIED = (450-400)/400 = 12.5%% change in price = 10% price ELASTICITY of supply = 12.5%/10% = 1.251.25 > 1 , yes ,the supply is ELASTIC . | |