At a price of 8 per unit, the quantity supplied of a commodity is 200 units. Its price elasticity of supply is 1.5. If its price rises to 10 per unit, calculate the quantity supplied at the new price?

275 units

The correct answer is Option (2) → 275 units

We are given:

• Initial price (P₁) = ₹8

• New price (P₂) = ₹10

• Initial quantity supplied (Q₁) = 200 units

• Elasticity of supply (Eₛ) = 1.5

% change in price= [(10 - 8)/ 8] * 100 = 25%

We use the price elasticity of supply formula:

Es = % change in quantity supplied / % change in price

1.5 = % change in quantity supplied / 25

% change in quantity supplied= 25 * 1.5 = 37.5 %

Increase in quantity=37.5% of 200 = 75

New quantity supplied=200+75=275 units