Tag: law of supply and elasticity of supply

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Multiple choice economics theory of supply elasticity of supply supply - law of supply and price elasticity of supply law of supply and elasticity of supply

If a dealer is prepared to supply 1000 sets of a 29" Colour TV if the price is Rs. 12,000 per set, however if the price rises to Rs. 15,000 he is prepared to supply 1,500 pieces. The elasticity of supply of the TV set is _______.

  1. 1

  2. 2

  3. 0.75

  4. 1.4
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Es = (% change in Q) / (% change in P). % change in Q = (500/1000)*100 = 50%. % change in P = (3000/12000)*100 = 25%. Es = 50/25 = 2.

Multiple choice economics theory of supply elasticity of supply supply - law of supply and price elasticity of supply law of supply and elasticity of supply

A 6% decrease in price has caused 9% decrease in quantity supplied, the price elasticity of supply will be _________.

  1. 1.33

  2. -1.33

  3. 1.5

  4. -0.66
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Elasticity of supply is the ratio of percentage change in quantity to percentage change in price. Es = 9 / 6 = 1.5. The negative signs cancel out because elasticity of supply is generally positive.