The price elasticity of supply of commodities X and Y is equal. The pr – InterviewSolution

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1.	The price elasticity of supply of commodities X and Y is equal. The price of X falls from Rs.10 to Rs.8 per unit and supply falls by 16 percent. The price of Y rises by `10%`. Calculate the percentage increase in the supply.
Answer» Let us calculate `P.e_(S)` for commodity X ltbr. `P=10," "P_(1)=8," "DeltaP=-2` `%DeltaP=(-2)/(10)xx100=-20%` `%DeltaS=-16%` given `"Hence "P.e_(S)=(%"Change in Quantity supplied"_(X))/(%"Change in price"_(X))=((-)16%)/((-)20%)=0.8` `P.e_(S)" of X"=P.e_(S)" of Y (given)"` Hence `P.e_(S)` of Y = 0.8 `P.e_(S)(Y)=(%"Change in Quantity supplied"_(Y))/(%"Change in price"_(Y))` `0.8=(%"change in Quantity supplied"_(Y))/(10%)` `%"change in QS"_(Y)=(8)/(10)xx10=8%.`

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