At the market price of Rs 10, a firm supplies 200 units of a good. If the market price increases to Rs 30, and the price elasticity of the firm's supply is 2. Then at new price what quantity will be supplied by the firm?

1000

The correct answer is Option (3) → 1000 

• Initial price (P₁) = Rs 10

• New price (P₂) = Rs 30

• Initial quantity supplied (Q₁) = 200 units

• Elasticity (PES) = 2

% change in price= [($P_2-P_1$)/$P_1$] * 100

                              = [(30-10)/10] * 100 = 200%

Price Elasticity of Supply (PES) = % change in quantity supplied​ / % change in price

2 =% change in quantity supplied /200

% change in quantity supplied = 400 %

Increase in quantity=400% of 200

                                 = (400/100) * 200 

                                 = 8000

New quantity=200+800=1000