The price of a good changes from Rs 20 to Rs 25. As a result, the quantity suppl

Question

The price of a good changes from Rs 20 to Rs 25. As a result, the quantity supplied changes from 500 units to 1000 units. Calculate the price elasticity of supply.

Options:

A . 2

B . 2.5

C . 4

D . 5

Answer: Option C
:
C
Price changes from Rs 20 to Rs 25 and qunatitysupplied changes from 500 to 1000.

ϵ_{s} = \frac{q_{1} - q_{0}}{p_{1} - p_{0}} \times \frac{p_{0}}{q_{0}} ϵ_{s} = \frac{1000 - 500}{25 - 20} \times \frac{20}{500} ϵ_{s} = \frac{500 \times 20}{500 \times 5} = 4

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