CUET Preparation Today
A seller sells 80 units when price is Rs 4 per unit. The price elasticity of supply is 2. How much quantity will the seller supply when price rises to rs 5 per unit? |
80 100 120 130 |
120 |
The correct answer is Option 3: 120 Price elasticity of supply ($e_s$)= Percentage change in quantity supplied /Percentage change in price = [(△Q/Q)*100]/[(P/△P)*100] = [△Q/Q] * [P/△P]
△P = 1
△Q =?
$Q_1$= 8
P= 4
Putting these vaues,
Price elasticity of supply ($e_s$)=[△Q/Q] * [P/△P]
2 = [△Q/80] * [4/1]
△Q=40
△Q = $Q_1$ -Q
40=$Q_1$- 80
$Q_1$=120
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