CA Foundation P4 · Chapter 2 · Question 14 of 15
When the price of a good rises from Rs. 40 to Rs. 50, quantity supplied rises from 200 units to 260 units. Price elasticity of supply (original base) is:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: D) 1.2
Explanation
Percentage change in quantity supplied = (260 - 200)/200 x 100 = 30%. Percentage change in price = (50 - 40)/40 x 100 = 25%. Es = 30/25 = 1.2, so supply is relatively elastic. 0.83 is the inverse.
More Theory of Demand and Supply MCQs
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