The price elastiy of supply of good X is half the price eleasicity of supply of Good Y. A 10% rise in the price of good Y results in a rises in its supply form 400 units to 520 units. Calculate the precentage change in quantity supplied of good X when its price falls from ₹10 to ₹8 per unit.

Explanation

Perecntage change in Supply ` = (DeltaQ)/(Q) xx 100 =(120)/(400) xx 100 = 30%`
`E_(s) = ("Percentage Change in Supply")/("Percentage change in Price") =(30%)/(10%) = 3`
Now, Price Elasticity of Good X = 1.5 (as elasticity of supply of good X is half the price elasticity of supply of Good Y.)
Let us now calculate % fall in Supply for X

Percentage change in Price `= (DeltaP)/(P) xx 100 = (2)/(10) = 100 =20%`
`1.5 =("Percentage Change in Supply")/(20)`
Percentage fall in supply = 30%
Supply for Good X will fall by 30%