At the market price of ₹10, a rm supplies 4 units of output. The mar

1.	At the market price of ₹10, a rm supplies 4 units of output. The market price increases to ₹30. The price elasticity of the firm’s supply is 1.25. What quantity will the firm supply at the new price?
Answer» Price elasticity of supply (ES) = \(\frac{ΔQ}{ΔP}\times\frac{P}{Q}\) in the given situation, Es = 1.25 ΔQ = ? ΔP = 20 P = 10 Q = 4 Applying these values in formula,we get, 1.25 = \(\frac{ΔQ}{20}\times\frac{10}{4}\) 1.25 = \(\frac{10ΔQ}{80}\) 100 = 10ΔQ ΔQ = \(\frac{100}{10}\) = 10 Since ΔQ = 10,Firm's new output = 4 + 10 = 14

At the market price of ₹10, a rm supplies 4 units of output. The market price increases to ₹30. The price elasticity of the firm’s supply is 1.25. What quantity will the firm supply at the new price?

Answer»

Price elasticity of supply (ES) = \(\frac{ΔQ}{ΔP}\times\frac{P}{Q}\) in the given situation,

Es = 1.25

ΔQ = ?

ΔP = 20

P = 10

Q = 4

Applying these values in formula,we get,

1.25 = \(\frac{ΔQ}{20}\times\frac{10}{4}\)

1.25 = \(\frac{10ΔQ}{80}\)

100 = 10ΔQ

ΔQ = \(\frac{100}{10}\) = 10

Since ΔQ = 10,Firm's new output = 4 + 10 = 14