Q. 85.0( 1 Vote )

When the price of

Answer :



Price elasticity = Percentage change in Qs/Percentage change in P


= (ΔQs/ΔP)*(P/Qs)


= (20/1)*(4/100) = 0.8


The price elasticity of supply of the commodity is 0.8. The supply is inelastic in nature. When the change in price results in a less than proportionate change in the quantity supplied, the supply is considered as inelastic. The elasticity coefficient of inelastic supply will be less than 1 (Es<1). Graphically, it will be a steep upward sloping curve.


E.g., Gasoline



Rate this question :

How useful is this solution?
We strive to provide quality solutions. Please rate us to serve you better.
Try our Mini CourseMaster Important Topics in 7 DaysLearn from IITians, NITians, Doctors & Academic Experts
Dedicated counsellor for each student
24X7 Doubt Resolution
Daily Report Card
Detailed Performance Evaluation
caricature
view all courses
RELATED QUESTIONS :

(a) Define price Economics - Board Papers

If the market supEconomics - Board Papers

Will a profit-maxNCERT - Introductory Microeconomics

How does an increNCERT - Introductory Microeconomics