Total revenue at a price of …
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Preeti Dabral 2 years, 9 months ago
Price elasticity of supply (PES) measures the relationship between change in quantity supplied following a change in price.
ES {tex}=\frac{\Delta Q}{\Delta P} \times \frac{P}{Q}{/tex}
{tex}\Delta{/tex}P = 5 - 4 = Rs.1
Total Revenue = 600
P {tex}\times{/tex} Q = 600
4 {tex}\times{/tex} Q = 600
Q {tex}=\frac{600}{4}{/tex} = 150 units
Total Revenue when price increase = Rs.750
P1 {tex}\times{/tex} Q1 = Rs.750
Q1 {tex}\times{/tex} 5 = Rs.750
Q1 {tex}=\frac{750}{5}{/tex} = 150
ES {tex}=\frac{\Delta Q}{\Delta P} \times \frac{P}{Q}{/tex}
{tex}\Delta{/tex}Q = Q1 - Q
{tex}\Delta{/tex}Q = 150 - 150 = 0
{tex}\Delta{/tex}P = P1 - P
{tex}\Delta{/tex}P = Rs.5 - Rs.4 = 1
ES {tex}=\frac{0}{1} \times \frac{4}{150}{/tex}
ES = 0
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