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    The market price for Brand X lager rises from £2 a pint to £2.10 a pint. The price elasticity of supply for Brand X is 1.6. A publican would like to change his supply of Brand X in response to this price change. He currently supplies 300 pints a day. What will he supply following the price change (ceteris paribus)?


    Its 5% change in price but what about quantity
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    put the numbers in the formula which i have forgotten XD and play around with the numbers
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    (Original post by abcdefghijklmnopqrstuvwxyz)
    put the numbers in the formula which i have forgotten XD and play around with the numbers
    ...... great
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    (Original post by Happy Kid)
    ...... great
    well if you actually used you're head then you'd realise that its a perfectly good answer, ****.....
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    PES = [(Change in Q)/(Change in P)] * (P/Q) = (% change in quantity supplied) / (% change in price)

    Just sub the values in.

    Change in Q = Q1 - Q0
    Change in P = P1 - P0
    P = original price
    Q = original quantity supplied
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    (Original post by Mustard-man)
    PES = [(Change in Q)/(Change in P)] * (P/Q) = (% change in quantity supplied) / (% change in price)

    Just sub the values in.

    Change in Q = Q1 - Q0
    Change in P = P1 - P0
    P = original price
    Q = original quantity supplied
    There is no change in quantity.
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    (Original post by Happy Kid)
    There is no change in quantity.
    There is a change in quantity supplied. That is what you're trying to work out.

    (Original post by Happy Kid)
    He currently supplies 300 pints a day. What will he supply following the price change (ceteris paribus)?


    Its 5% change in price but what about quantity
    So 300 is Q0. You're trying to work out Q1. You just need to sub everything in and solve for Q1.
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    (Original post by Mustard-man)
    There is a change in quantity supplied. That is what you're trying to work out.

    So 300 is Q0. You're trying to work out Q1. You just need to sub everything in and solve for Q1.
    I dont get what your on about can u just do the calculation.
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    Q
    -
    5 = 1.6

    Bit of maths...
    Rearrange...
    Q= 5 x 1.6
    Q= 8

    so the answer is that 8% more must be supplied; in other words, 108% of the original must be supplied,
    8% of 300 is 24
    So 300 + 24= quantity he should supply.
    108% of 300= 324
 
 
 
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