The price of commodity Z increased from 1000 FRW to 1,300 FRW leading to an increase in its quantity supplied by 30%. Find the price elasticity of supply?

Price elasticity of supply is calculated using the formula:

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

First, calculate the percentage change in quantity supplied:

Initial quantity supplied = 1000
New quantity supplied = 1000 + 30% of 1000 = 1000 + 0.3*1000 = 1000 + 300 = 1300

Percentage change in quantity supplied = ((1300 - 1000) / 1000) * 100 = 30%

Next, calculate the percentage change in price:

Initial price = 1000 FRW
New price = 1300 FRW

Percentage change in price = ((1300 - 1000) / 1000) * 100 = 30%

Now, plug these values into the formula:

Price Elasticity of Supply = 30% / 30% = 1

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

Calculating Price Elasticity of Supply (PES)

PES = (% Change in Quantity Supplied) / (% Change in Price)

Step 1: Calculate the percentage change in price

% Change in Price = ((New Price - Old Price) / Old Price) x 100
= ((1,300 FRW - 1,000 FRW) / 1,000 FRW) x 100
= 30% increase

Step 2: Calculate the percentage change in quantity supplied

% Change in Quantity Supplied = 30% (given in the question)

Step 3: Substitute the values into the PES formula

PES = (30%) / (30%)
= 1

Therefore, the price elasticity of supply (PES) for commodity Z is 1.