Q1. The price of commodity X increased from 100RWF to 300RWF as a result of a 20% increase in its quantity supplied. Determine its price elasticity of supply?

Price elasticity of supply is calculated using the formula:

Price Elasticity of Supply = (% Change in Quantity Supplied) / (% Change in Price)

Given:
Initial price (P1) = 100RWF
Final price (P2) = 300RWF
Percentage change in price = ((P2 - P1) / P1) * 100 = ((300 - 100) / 100) * 100 = 200%

Percentage change in quantity supplied = 20%

Price Elasticity of Supply = 20% / 200% = 0.1

Therefore, the price elasticity of supply for commodity X is 0.1.

Step 1: Calculate the percentage change in quantity supplied

Percentage change in quantity supplied = [(New quantity - Old quantity) / Old quantity] x 100%
= [(300 - 100) / 100] x 100%
= 200%

Step 2: Calculate the percentage change in price

Percentage change in price = [(New price - Old price) / Old price] x 100%
= [(300 - 100) / 100] x 100%
= 200%

Step 3: Calculate the price elasticity of supply

Price elasticity of supply = (Percentage change in quantity supplied) / (Percentage change in price)
= 200% / 200%
= 1

Therefore, the price elasticity of supply for commodity X is 1.