Assertion (A): If the price elasticity of supply of a good is 2, a 1 per cent rise in its price raises the quantity supplied by 2 per cent.
Reason (R): The price elasticity of supply of a good is the percentage change in quantity supplied due to one per cent change in the market price of the good.
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → Both (A) and (R) are true and (R) is the correct explanation of (A).
Price elasticity of supply tells how many per cent the quantity supplied changes for a 1 per cent change in price. So eS = 2 means a 2 per cent change in quantity.
Assertion (A): If the price elasticity of supply of a good is 2, a 1 per cent rise in its price raises the quantity supplied by 2 per cent. — True. eS = percentage change in quantity supplied ÷ percentage change in price. With eS = 2 and a 1 per cent price rise, the quantity rises by 2 × 1 = 2 per cent.
Reason (R): The price elasticity of supply of a good is the percentage change in quantity supplied due to one per cent change in the market price of the good. — True. This is the definition of price elasticity of supply.
Why R explains A?
A applies this definition to a value of 2. By the definition, eS is the percentage change in quantity for one per cent change in price, so a value of 2 means a 2 per cent change.
NCERT (2026-27): “4.7 Price Elasticity of Supply The price elasticity of supply of a good measures the responsiveness of quantity supplied to changes in the price of the good. … When the supply curve is vertical, supply is completely insensitive to price and the elasticity of supply is zero. In other cases, when supply curve is positively sloped, with a rise in price, supply rises and hence, the elasticity of supply is positive.” “Summary … The price elasticity of supply of a good is the percentage change in quantity supplied due to one per cent change in the market price of the good.” |