Supply of a good rises from 200 units to 240 units as a result of 20 p – InterviewSolution

1.

Supply of a good rises from 200 units to 240 units as a result of 20 percent rise in its price. Calculate its Price Elasticity of Supply.

Answer»

Given:

% Change in Price = 20

% Change in Supply = Q₁ – Q = 240-200= 40

40/200 x 100 = 20%

e_s = % Change in Supply/% Change in Price

= 20/20

e_s = 1

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