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InterviewSolution
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A firm sells 40 units of commodity X when its price is * 10. At what price it will sell 60 units of the commodity if its price elasticity of supply is 0.8. |
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Answer» ill be = 3.75 Step by step explanation :We have given ;Elasticity of Supply = 0.8Orginal quantity = Q = 40New quantity = Q¹ = 60Orignal Price = P = 10New Price = P¹ = ?CHANGE in Quantity = Orginal quantity - NEW quantity∆Q = 40 - 60 = -20Change in price=Orignal Price - New Price∆P = 10 - X = ?Es = ∆Q/∆P × P/Q0.8 = -20/x ×10/40 x = 6.25∆P = 6.25 Here as we know supply is increasing so by the rule of demand and supply , price will be decreasing.P - ∆P = P¹10 - 6.25 = 3.75 Ans. |
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