When price of a good falls from Rs 20 to Rs 10 per unit, producer reduces supply from 100 units to 50 units. Calculate price elasticity of supply.

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#### Solution

Given that

Q_{0} = 100 units and Q1 = 50 units

P_{0} = Rs 20 and P_{1} =Rs 10

ΔP = P_{1} - P_{0}

ΔP=10-20=-10

ΔQ = Q_{1} - Q_{0}

ΔQ = 50 - 100=-50 units

We know that

`E_s = (DeltaQ)/(DeltaP)xxP_0/Q_0`

`=(-50)/-10xx20/100`

`=5xx1/5=1`

Concept: Concept of Supply

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