Question

Complete the following market supply schedule and calculate P.`e_(S)` of firm, A & B when price rises from Rs. 2/unit to Rs. 3/unit.

Answer 1

Firm (A) : `P=2,Q=37" , "P_(1)=3, Q_(1)=40, DeltaP=1,DeltaQ=3`
`P.e_(S)=(P)/(Q)xx(DeltaQ)/(DeltaP)=(2)/(37)xx(3)/(1)=(6)/(37)=0.16`
Firm : B `P=2," "Q=30,P_(1)=3," "Q_(1)=40, DeltaP=1, DeltaQ=10`
`P.e_(S)=(P)/(Q)xx(DeltaQ)/(DeltaP)=(2)/(30)xx(10)/(1)=(2)/(3)=0.67`