When the price of a good is Rs 4 per unit, a producer supplies 8 units a day. If price rises to rs 5 per unit, he is willing to supply 10 units a day. Calculate price elasticity of supply.

1

The correct answer is Option 2:1

Price elasticity of supply ($e_s$)= Percentage change in quantity supplied /Percentage change in price

                                                     =  [△Q/Q] * [P/△P]

Change in Price = 1 (5-4)

Change in Quantity  = 2 (10-8)

$e_s$ =(2/1) * 4/8

           = 1