At the market price of Rs 10, a firm supplies 4 units of output. The market price increases to Rs 30.

Monjur Alahi

At the market price of Rs 10, a firm supplies 4 units of output. The market price increases to Rs 30. The price elasticity of the firm's supply is 1.25. What quantity will the firm supply at the new price?


0 like 0 dislike
1 views
Share with your friends

1 Answers

Salim Ahmed Kawsar

Call

Initial Price, P1 = Rs 10
Initial Output, Q1 = 4 units
Final Price, P2 = Rs 30

ΔP = P2 - P1

= Rs 30 - 10 = Rs 20
Elasticity of supply,es = 1.25

es =ΔQ/ΔP x P1/Q1

1.25 = ΔQ/20 x 10/4

= 1.25 x 8 = ΔQ

= ΔQ = 10 units

Thus final output supplied,  Q2 = ΔQ + Q1

Q2 = 10 + 4 = 14 units

0 like 0 dislike
1 views
Talk Doctor Online in Bissoy App
Let the production function of a firm be Q = 2L2K2 Find out the maximum possible output that the firm can produce with 5 units of L and 2 units of K.

(a) Q = 2L2K2 .....(1) L = 5 units of labour K = 2 units of capital Putting these values in equation (1) Q = 2(5)2(2)2 = 2 (25) (4) Q = 200 units (b) If L...

1 Answers 1 views
How are the total revenue of a firm, market price, and the quantity sold by that firm related to each other?

Total revenue is defined as the total sales proceeds of a producer by selling corresponding level of output. In other words, it is defined as price times the quantity of...

1 Answers 1 views
A firm earns a revenue of Rs 50 when the market price of a good is Rs 10. The market price increase to Rs 15

At Price, P1 = Rs 10 Total Revenue, TR1 = P1 x Q1 = 50 = TR1/P1 = Q1 = 50/10 = Q1 = Q1 = 5units At Price, = Rs 15 Total Revenue, TR2 =...

1 Answers 1 views
The market price of a good changes from Rs 5 to Rs 20. As a result, the quantity supplied by a firm increase by 15 units.

Elasticity of Supply, es = 0.5 Initial Price, P1 = Rs 5 Final price, P2 = Rs 20 ΔP = P2 - P1 = 20 - 5 ΔP = 15 ΔQ = 15 es = ΔQ/ΔP x P1/Q1 0.5...

1 Answers 1 views
A consumer buys 27 units of a good at a price Rs.10 per unit. When the price falls to Rs.9 per unit, the demand rises 27 to 30 units.

Given Q= 27, P = 10, P1 = 9, Q1 = 30                  Total Expenditure Method P Q Total Expenditure (P x Q) 10 27 270 9 30 270 Since, with the fall in...

1 Answers 1 views
A consumer buys 10 units of a good at a price of Rs.9 per unit. At price of Rs.10 per unit, he buys 9 units.

Quantity (Units) Price (Rs.) TE (P x Q) (Rs.) 10 9 90 9 10 90 As per the expenditure approach, when with a change in price, the total expenditure remains unchanged, demand is unitary elastic (eD= 1). The shape...

1 Answers 1 views
A consumer buys 8 units of a good at a price Rs.7 per unit. When price rises to Rs.8 per unit, he buys 7 units.

Quantity (Units) Price (Rs.) TE (Rs.) 8 7 56 7 8 56 As per the expenditure approach, when with a change in price, the total expenditure remains unchanged, demand is unitary elastic (eD, = 1) The shape of demand...

1 Answers 1 views
The average fixed cost at 4 units of output is Rs.20. Average variable cost at 5 units of output is Rs.40.

(d) Average cost of producing 5 units is Rs.60.

1 Answers 1 views
How, are the total revenue of a firm, market price and the quantity sold by the firm related to each other?

Total revenue is the multiplication of quantity sold and market price, whereas market price is the ratio of total revenue and quantity sold. TR = P X Q P = △TR/△Q

1 Answers 1 views
What is the behaviour of marginal revenue in the market in which a firm can sell any quantity of the output it produces at a given price.

MR is constant at all levels of output.

1 Answers 1 views
X