Home › CA Foundation › Business Economics › Supply › The coefficient of price elasticity of supply is…
The coefficient of price elasticity of supply is computed as the percentage change in quantity supplied divided by the:
Apercentage change in income
Bpercentage change in quantity demanded
Cpercentage change in tastes
Dpercentage change in price
Answer & Solution
Correct answer: D. percentage change in price
1. Es = (percentage change in quantity supplied) / (percentage change in price).
2. The denominator is therefore the percentage change in price.
3. Income, quantity demanded and tastes do not appear in the supply-elasticity formula.
4. The answer is the percentage change in price.
_Source: ICAI BoS CA Foundation Paper 4 Business Economics, Ch 2 Unit III "Supply", p.5_
Related questions
A noted exception to the law of supply is the supply of labour, where at very high wage raAn increase in the number of firms selling a good in a market, other things constant, willSocial efficiency in a competitive market is achieved at the equilibrium price because at Producer surplus in a market is best described as the benefit producers gain because the pIf the supply of bottled water decreases while demand stays the same, the new market equilIf, at the prevailing price, the quantity demanded of a good exceeds the quantity suppliedIn a market, the demand and supply schedule shows that at Rs 3 quantity demanded equals quThe market price of a good is the level at which the wishes of buyers and sellers coincide