The price elasticity of supply of commodity X and Y are equal. The price of X falls from ₹10 to ₹8 per unit and its quantity supplied falls by 16 per unit. The price of Y rises by 10 per cent. Calculate the precentage increase increase in its supply.

Explanation

Percentage change in supply `= (DeltaP)/( P) xx 100= (2)/(10) xx 100 = 20%`
`E_(s) = ("Percentage Change in Supply")/("Percentage change in Price") =(16%)/(20%) = 0.8`
Now, Price Elasticity of Good Y= 0.8(as both X and Y have same price elasticity)
Let us now calculate % rise in Supply for y

`E_(s) = ("Percentage Change in Supply")/("Percentage change in Price")`
`0.8 = ("Percentage Change in Supply")/(10)`
Percentage rise in supply = 8%
Supply for Good Y will rise by 8%