Question: The quantity supplied and the price of product Z are given below:
|Price (Rs. Per Kg.)||Quantity Supplied (Kgs. in thousands)|
Draw a supply curve for the supply schedule of product B and find the type of elasticity of supply using the curve.
The supply curve for product Z is shown in Figure
In 5.21, when the price of product Z is Rs.50, the quantity supplied is 30,000 kgs. When price increases to Rs.55, supply reaches to 35,000 kgs. This shows that the proportionate change in quantity supplied is equal to the change in the price of product Y. Therefore, the supply of product B is unit elastic (es=1).