When price of a good rises from Rs 10 to Rs 12, the producer supplies 10 % more. Calculate price elasticity of supply.

0.5

The correct answer is Option 1: 0.5

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

Percentage change in quantity supplied = 10%

Change in Price = Rs 2

Percentage change in price = 2/10*100 = 20%

Price elasticity of supply ($e_s$) = 10%/20% = 0.5