×(Secondary & LESSON PLAN
(Secondary & Senior Secondary)
1. CLASS
:
XII
2. SUBJECT
:
Economics
3. TOPIC
:
Producer Behaviour[Production function]
4. NO. OF PERIODS
:
5. DATE OF COMMENCEMENT
:
6. EXPECTEDD DATE OF COMPLETION
6
:
7. ACTUAL DATE OF COMPLETION
TEACHER ORIENTATION
:
CONTENT: Meaning of Production,The Production function,Concept of product,
return to a factor, The law of variable proportion and Law of dimnishing marginal
product'.
8.
9. LEARNING
(I)
Knowledge
(II)
Understanding
(III)
Application
S.no.
Teaching/Learning Points
Activities
Teaching/Learning Points
Production function
Meaning- Production is defined as the
transformation of inputs into output.
0
1
4
Meaning of Production function- Production
function is the process of getting the maximum
output from a given quantity of inputs in a
particular time period. It includes only technically
efficient combination of inputs.
3
18
4
24
5
28
6
30
Types of production function
7
30
1.Short run production function
8
28
Q=f(K,L)
PP rising in
Incdreasing rate
TP rise at
diminishing rate
TP falls
2. Long run production function.
Concept of Product
Total Product(TP)
TP=AP×Q or ∑MP
AP=TP/Q
MP=∆TP/∆ q
Relationship between TP,AP and MP
Returns to a factor- The law of variable
proportion and law of diminishing marginal
product
Meaning of law of variable proportion-The law of
variable proportion states that when total out
put or production of a commodity is increased by
adding units of a variable inputs while the
quantities of other inputs are held constant, the
increase in total production, after some time ,
becomes smaller and smaller.
Units of labour
Average Product ( A.P)
AP
TP
0
0
0
1
4
4
2
10
5
3
18
6
4
24
6
5
28
5.6
6
30
5
Three stages of law1. Stage of increasing returns
2. stage of diminishing returns
3. Stage of negative returns.
Reason behind increasing and diminishing
returns to a factor
Increasing returns
7
30
4.3
8
28
3.5
MP Schedule
1.Under utilization of fixed factors
2. Indivisibility of factors
Unit of labour
TP
MP
0
0
-
1. Optimum use of fixed factors
1
4
4
2. Lack of perfect substitution between
factors.
2
10
6
3
18
8
STUDENT ORIENTATION
4
24
6
CONCEPT TEST
5
28
4
1. What do you mean by production?
6
30
2
30
0
28
-2
3.Specilisation and division of labour
Causes of decreasing returns
2. What are the components of production?
7
3. Define production function.
8
Home work
1. Complete the following
tableUnits of 1
6
2
3
4
5
TP(units) -
-
-
-
-
AP
-
-
-
-
labour
-
MP
14
8
10 12 14
10
2. Distinguish between fixed
factors and variable factors.
3. Identify the different output
level which marks the
different phases of
operation of law of variable
proportion on the following
table-
Units of 0
6 7 8
1
2
TP
0 4
29 27 22
8
3
4
5
labour
14 21 29
Remedial measures
Assignment 1
1. Define production.
2. What is meant by average product?
3. Explain law of variable proportion with
the help of a schedule.
Assignment II
1.How will you derive MP from TP ?
2. Distinguish between short run and long
run.
3. What are the causes of increasing returns
to a factor?
Assignment III
1. Explain the relationship between TP,AP
and MP.
2. Explain effects on TPP when other factors
remain constant and variable factor
increased?
3. Calculate TP and MP from the following
table
Units of labour 1
7
AP
Refrencesww.wikipedia.com
1. Text book NCERT
2
2
3
3
4
4
5
5
5
6
4
2
2
3
10
18
4
24
5
28
6
30
7
30
8
28
TP rise at
diminishing rate
TP falls
8
28
TP falls
PP rising in
Incdreasing rate
2. www.worldofteachers.comwww.wikipedia.com
3. Text book of Sarswati publication
4. Introductory micro economics by c.b sachdev
5.
www,wikipedia.com
SUBJECT- ECONOMICS
CLASS XII
TOPIC- PRODUCTION COST
TEACHER ORIENTATION
DETAILS OF THE SUBJECT MATTER
Cost and cost function, Types of cost,Time element in cost,
Total cost, Marginal cost and Average cost.
Relationship between AC and AVC , TC and TVC, AFC and AVC , AC and Mc and AVC and MC
CONCEPT DETAILS
Meaning of cost= Cost of producing a commodity is the payment made to the factors of production which are used
In the production of that commodity.
Types of cost1.Implicit cost and explicit cost
2.Money cost and real cost
3.Social and Private cost
4. Opportunity cost
Cost Function-A cost function show the functional relationship between output and cost of production.
C=f(x) X= Output , C=Cost
TIME ELEMENT IN COST
Short run cost –The short run costs are the costs over a period during which some factors are in fix supply like
Machinery , plants etc.
LONG RUN COST= The long run costs are the costs over a period long enough to permit changes in all factors
Of production.
TOTAL COST= TC=TFC+TVC or AC×Q
TOTAL FIXED COST OR SUPPLEMENTRY COST - Fixed costs are the sum total of expenditure incurred
By producer on the purchase of hiring of fixed factors of production.
TFC=TC-TVC or AFC×Q
OUTPUT
0
1
2
3
4
TFC
10
10
10
10
10
TOTAL VARIABLE COST –(TVC) Variable costs are those costs which vary with the quantity of output produced.
TVC=TC-TFC or
AVC×Q
or
∑ MC
OUTPUT
0
1
2
3
4
TVC(Rs)
0
10
18
30
45
AVERAGE FIXED COST-AFC is defined as the fixed cost of producing per unit of the commodity.
AFC= TFC/Q
or
AC- AVC
Unit
0
1
2
3
4
AFC
∞
10
5
3.3
2.5
AVERAGE VARIABLE COST- Is defined as the variable cost of producing per unit of the commodity.
AVC=TVC/Q
or
AC- AFC
UNIT
1
2
3
4
TVC
10
18
30
45
AVC
10
9
10
11.3
AVERAGE COST(AC)- It is defined as cost of producing per unit of the commodity.
AC=TC/Q
or AC=AVC+AFC
UNITS
1
2
3
4
TC
20
28
40
55
AC
20
14
13.3
13.8
OR
UNITS
1
2
3
4
AFC
10
5
3.3
2.5
AVC
10
9
10
11.3
Ac
20
14
13.3
13.8
MARGINAL COST- (MC) Marginal cost is defined as addition made to total variable cost or total cost when one more
Unit of output is produced.
MC=∆TVC /∆
or ∆ TC/ ∆Q
UNITS
0
1
2
3
4
TVC
0
10
18
30
45
MC
-
10
8
12
15
RELATIONSHIP BETWEEN TVC AND MC
1.MC is addition made only to variable cost.Fixed cost do not affect MC.
2. When TVC rises at diminishing rate MC decline.
3. When TVC rises at increasing rate MC rises.
4. TVC=∑MC and MC= ∆ TVC/ ∆Q
RELATIONSHIP BETWEEN AC AND MC
1.AC and MC bot are derived from TC by the formule
AC=TC/Q and MC=∆ TC/ ∆ Q
2.AC and MC both are in U shaped.
4. When AC is falling then MC is AC.
3 When AC is rising then MC is above AC.
UNITS
0
1
2
3
4
TC
10
20
28
40
55
AC
-
20
14
13.3
13.8
MC
-
10
8
12
15
AVC
-
10
9
10
11.3
STUDENT ORIENTATION
EVALUATION TOOLS
Concept Test1.What is cost?
2.What is opportunity cost?
3.Define the following- Social cost, private cost,Money cost , real cost., Implicit cost and explicit cost.
4.What do you mean by variable cost?
HOME WORK
1.Define average and Marginal cost.
2.Distinguish between Short term cost and long term cost.
3.Explain the relationship between AC,AVC and MC.
4.Given that the total fixed cost is Rs.60 complete the followingOUTPUT inUNITS
1
2
3
AVC
Rs.
20
15
20
TC
Rs.
-
-
-
AC
Rs
-
-
-
MC
Rs.
-
-
-
AFC
RS
-
-
-
TVC
Rs
-
-
-
Remedial measures
Assignment I
1.Give two examples of fixed cost.
2.Express total cost in terms of fixed and variable cost.
3 Give the meaning of marginal cost.
Assignment II
1.Explain the relationship between MC and AC of a firm with the help of appropriate schedule.
2. Can AC be more than MC when AC is rising?
3.Distinguish between fixed cost and variable cost . Give one example of each.
ASSIGNMENT III
1. Explain the relationship between AC , AVC and MC with the help of appropriate schedule.
2. Complete the following table
OUTPUT in units
1
2
3
4
5
AVC
-
18
-
20
22
TC
60
-
-
120
-
-
-
MC
20
-
18
3. Calculate TVC, MC,AC from the following cost schedule of a firm, whose TFC are Rs.12.
OUTPUT in UNITS
1
TC in Rs.
2
20
3
26
4
31
38
REFRENCES
1.www.vkpublications.com.
2.www.sarswatihouse.com
3.Micro economics C>B>Sachdev
Project-
SUBJECT- ECONOMICS
CLASS XII
TOPIC-CONCEPTS OF REVENUE
TEACHER ORIENTATION
CONCEPT- Definition of revenue,Types of Revenue, Relationship between TR and MR
AR and MR. Firms Revenue curve or Demand curve. Relationship between revenue
and
Elasticity of demand.
CONCEPT DETAILDefinition of Revenue- Revenue is the money payment received from the sale of a
commodity.
Types of Revenue-
Total Revenue(TR)- It is defined as the total of aggregate of proceeds to the firm from
the sale of a commodity.
TR=P.Q
Average Revenue- AR is revenue per unit of out put sold.
AR=TR/Q
or P.Q/Q
or Ar=P
Marginal Revenue- MR is addition made to total revenue when one more unit of
output is sold.
MR=∆TR/∆Q
RELATIONSHIP BETWEEN TR AND MR
1. MR is an addition to TR when one more unit of out put is sold.
2.
When MR is positive TR is rising.
3. When MR is Zero TR is maximum .
4. When MR is negative TR falls.
5. When MR is constant TR will increase at a constant rate.
RELATIONSHIP BETWEEN AR AND MR
1.Both are derived with the help of TR.
AR=TR/Q, MR=∆TR/∆Q.
2. When AR is constant then AR=MR
3.When AR falls MR also falls BUT MR falls at twice the rate at which AR falls.
RELATIONSHIP BETWEEN TR AND MR
TR=AR.Q also TR= ∑MR
AR=TR/Q
MR=∆TR/∆Q
4. When TR is increasing at constant rate MR is constant .MR is shown by
horizontal line.
FIRMS REVENUE AND DEMAND CURVE
1. Under perfect competitionNO OF Units sold 1
2
3
4
5
Price(Rs)
10
10
10
10
10
TR=P.Q
10
20
30
40
50
AR
10
10
10
10
10
MR
10
10
10
10
10
FIRMS REVENUE UNDER MONOPOLY AND MONOPOLISTIC COMPETITION
OUTPUT
1
2
3
4
AR
10
9
8
7
TR
10
18
24
28
MR
10
8
6
4
RELATIONSHIP BETWEEN REVENUE AND ELASTICITY OF DEMAND
1.MR=AR(1-1/ed)
2.When ed=1 MR is Zero
3. When ed is >1 MR is positive.
4.When ed is <1 MR is negative
STUDENT ORIENTATION
EVALUATION TOOLS
Concept Test
a) Define MR.
b) Define revenue of a firm.
c) What is the relationship between Market price and the Marginal revenue for a
price taking firm?
d) A firms TR schedule is given in the following table, what is the product price
facing the firm?
Output
TR(Rs)
1
7
2
3
4
5
14
21
28
35
Home work
a) Explain the relationship between TR and MR with the help of a revenue
schedule.
b) How do changes in MR affect TR explain with the help of a revenue schedule.
c)Explain the relationship of AR and MR. when –
1.Firm is a price taker.
2.Firm want to sale more units of goods.Show with the help of a schedule.
d)Complete the following tableOUTPUT
1
2
3
4
TR
-
-
12
8
MR
-
4
-
-
AR
8
-
-
-
ASSIGNMENT
Assignment I 1.What is the other name of AR?
2 What is the relationship between AR and MR under perfect
competition,show with the help of
A schedule.
3.Complete the following table
OUTPUT units
1
2
3
4
Price Rs.
12
10
8
6
TR Rs
-
-
-
-
MR Rs.
-
-
-
-
ASSIGNMENT II
1.What is the relationship between AR and MR under perfect competition and
perfect competition competition.
2.Explain with the with the help of a schedule that TR is maximum when MR is
zero?
3.Complete the following table
OUTPUT in units
1
2
3
4
AR
6
-
4
-
5
2
MR
-
4
-
0
-
TR
6
-
-
-
-
ASSIGNMENT III
1.What is the relationship between market price and the marginal trevenue for a
price taking firm?
2.Explain the relationship between MR and AR when a firm is able to sale more
quantity of outputa) At the same price
b) Only by lowering the price.
3.Complete the following table
OUTPUT in units
4
5
6
7
8
Price in Rs,
9
-
-
6
-
TR
-
-
42
-
40
MR
-
4
-
-
-
HOME WORK1.Prepare an imaginary TR,MR and Ar schedule in a market situation in which the
firm is able to sale
More only by reducing the price of the product.
2What is revenue of a firm? give meaning of AR and MR .What happens to AR
when MR is –
a) greater than AR
b) Equal to AR
c)Less than AR
3.Complete the following tableOUTPUT
1
2
3
4
AR
-
-
11
-
MR
15
-
-
3
TR
-
26
-
-
REFRENCES
1.www.wikipedia.com
2.Micro economics arya prakashan
3.www.vkpublications.com
SUBJECT
ECONOMICS
CLASS
XII
TOPIC-
PRODUCER′S EQUILIBRIUM
TEACHER ORIENTATION
CONCEPT- Meaning of Producer′s equilibrium, Profit maximization condition of
the producer
With total cost and total revenue approach, with marginal cost and marginal
revenue approach.
Perfect competition
1.The three Profit maximization conditions and their proofs,short run
equilibrium ,super normal profit
Break even point and normal profit, minimum losses point, long run equilibrium.
Monopoly or Monopolistic competition.
CONCEPT DETAILS
Meaning of producer′s equilibrium- A producer is said to be in equilibrium
when he produce the level of
Output at which his profits are maximum.
Profit maximization conditions of the producerThe producer is in a state of rest only at the level of output at which the
difference between the total revenue
And total cost of production is maximum.
WITH TOTAL COST AND TOTAL REVENUE SCHEDULE
Profits are maximum where the vertical distance between TR and TC is maximum
or where both TRand TC have the same slope.
Profit=TR-TC
Producer′
Equilibrium condition with TR and TC approach
Profit are maximum where the following two conditions are satisfied 1. The
vertical distance between TR and TC is maximum
Or where both TR and TC have the same slope.2. Profits falls if one more unit of
output is produced.
Break – evenpoint- It is that point where TR=Tc or AR=AC and profit and loss are
zero.
Examples-Maximum profit situation with the help of a schedule-
OUTPUT
1
2
TR in Rs,
50
60
TC
60
PROFIT
-10
3
4
5
6
68
70
75
80
65
68
60
75
95
-5
0
10
0
-15
(TR-TC)
At output level of 1 unit 2 units,6 units producer is incurring loss
b) At out level of 3 units ,and 5 units producer is earning 0 profit , these are break even
level of output.
c) At output level of 4 units producer is earning profit.
With Marginal cost and Marginal revenue Approach
It is more useful to analyse the equilibrium of the firm with the MR and MC approach.
The equilibrium conditions are –
1)MR=MC
2) Slope of MR<slope of MC
Example of producer′s equilibrium condition with MR and MC schedule
OUTPUT
1
2
3
4
5
6
7
TR
5
10
15
20
25
30
35
TC
8
7
12
16
20
25
32
MR
5
5
5
5
5
5
5
MC
8
1
5
4
4
5
7
PROFIT
-3
3
3
4
5
5
3
The firm is in equilibrium at output level of 6 unit because here MR=MC and profit is 5Rs.The
firm is not in equilibrium position
At output level of 3 units here MR=MC because firm is increasing its production its profit also
increase.
Evaluation tools
STUDENT ORIENTATION
Concept test
1)Give the meaning of producer′s equilibrium.
2) Define profit.
3) What is break even point?
Home work
1)When does a producer earns maximum profit?
2)Explain briefly producer′s equilibrium with the help of TR and TC approach. Use schedule
and diagram.
3)The price of commodity X is Rs. 20 per unit and it remains constant. Give below the cost
schedule of 1 of its producer.
Find out the level of output at which this producer is in equilibrium.give reasons for your
answer.
OUTPUT
1
2
3
4
5
6
7
TC
26
45
60
76
94
114
142
REMEDIAL MEASURES
Assignment I
1. Define producer’s equilibrium.
2. What are the conditions of producer’s equilibrium?
3. How does a competitive firm reach its equilibrium?
4. Define price line.
Assignment II
1-The following table shows the TR and TC schedules of a competitive firm.
Calculate the profit at each level of output.Find the profit maximizing level of output?
OUTPUT
1
2
3
4
5
TR
10
20
30
40
50
TC
8
12
15
18
30
2) State two conditions of producer′s equilibrium under perfect competition?
3) Explain the producer′s equilibrium with the help of schedule and diagram.
Assignment III
1) On the basis of the information givn below determine the level of output at which the
producer will be in equilibrium.
Use the marginal cost and marginal revenue approach. Give reasons for your answer.
OUTPUT
1
2
3
4
5
6
7
Price
7
7
7
7
7
7
7
TC
7
15
22
28
33
40
48
2. Suppose the demand and supply –curves of salt are given by Yd= 1000-P and Ys= 700 +2p
a) Find the equilibrium price and quantity.
b) Now suppose that prices of the inputs used to produce salt have increased so that the new
supply curve is Ys=400+2p
How does the equilibrium price and quantity changed? Does the change confirm to your
expectations?
3. When income of consumer’s increase what will be its effects on equilibrium price? Explain
with the help of a diagram.
PROJECT
1.Consulting a balance sheet of a firm calculate the profit of the firm.
2 With the hypothetical schedule calculate maximum profit at output level of a firm.
Refrences
1. www.wikipedia.com
2 www.sarswatihouse.com
3 Geeta publishing house
4 Principles of economic theory by M.L.Seth
5. Theory of economics by K.P.Jain
.
SUBJECT-ECONOMICS
CLASS-
XII
TOPIC-THEORY OF SUPPLY AND LAW OF SUPPLY
TEACHER ORIENTATION
CONCEPT- Concept of Supply, Definition of supply,difference between supply
and stock
The law of supply-Definition and assumption of the law of supply,The supply
schedule,Reason behind upwards sloping supply.
Determinants of supply,Forms of individual supply and market supply,change in
quantity supplied and change in supply.
CONCEPT DETAIL-
Definition of supply-Supply of goods is the quantity offered for sale in a given
market at a given time at various prices.
DIFFERENCE BETWEEN SUPPLY AND STOCKStock-Stock of a commodity is the total quantity that is available in a market at a
certain time.
Supply-Supply is that part of stock which is a seller is ready to sale at a certain
price during a certain time.
THE LAW OF SUPPLY-According to law of supply other things remaining constant
quantity supplied of a commodity is directly related to the price of the
commodity.
THE SUPPLY SCHEDULE AND THE SUPPLY CURVE-
PRICE Rs. Per kg.
Quantity supplied
1
2
5
3
8
4
12
18
(Kg.per month)
REASONS BEHIND UPWARD SLOPING SUPPLY CURVE1. Law of diminishing marginal productivity
2. Goal of profit maximization
Factors determining Supply- Sx=f(px,pz,t,c,gp)
Sx=Supply of commodity x
F=functional relationship
Px=price of commodity x
Pz= Price of related goods
T=Technological changes
C=cost of production
Gp= Government policy
INDIVIDUAL SUPPLY AND MARKET SUPPLY
Individual supply-It shows the amount of a commodity that is a particular firm
would prefer to sale at different prices in the
Market.
Individual supply schedule and curve
Px
1
2
Supply
4
8
3
11
4
5
13
15
(By a firm)
MARKET SUPPLY- Market supply showing the quantity of goods that all the firms in the market desired to sale at
different prices is known as market supply.
Market Supply SchedulePx
1
Supply by Firm A
2
4
3
4
8
Supply by Firm B
2
5
Market supply
6
13
11
7
18
5
13
9
22
15
10
25
CHANGE IN QUANTITY SUPPLIED AND C HANGE IN SUPPLY
Change in quantity supplied- (Movement on supply curve)- A movement along the supply curve is caused by changes
in the price of the good other things remaining constant.
Expansion of Supplly – It refers to rise in supply due to rise in price of the good.
Price of x in Rs.
10
12
15
Supply of X in units
100
125
150
CONTRACTION OF SUPPLY- It refers to fall in the supply due to fall in price of the good.
Price of X in Rs.
15
12
10
Supply of X in units
150
125
100
CHANGE IN SUPPLY- Change in supply is caused by change in factors other than the price of the good.
FACTORS AFFECTING THE CHANGE IN SUPPLY
1. Price of other commodity
2. State of technology
3.Cost of production
4. Government policy
TYPES OF CHANGE IN SUPPLY
1.Increase in supply
2.Decrease in supply
INCREASE IN SUPPLY- Increase in supply means more quantity supplied at the same price .It also means that same
quantity supplied at alower price.
Causes of increase in supply
1.Improvement in technology
2.Fall in the price of related goods.
3.Fall in the cost of production
4.Fall in excise duty
SCHEDULE
Price of X in Rs.
10
10
Supply of X
100
125
Price of X in Rs.
10
8
Supply of X in units
100
100
Lower price
DECREASE IN SUPPLY- When supply of a commodity falls due to unfavourable changes in factors other than price is called
decrease in supply.
Causes of Decrease in Supply
1.Obsolete technique of production
2.Increase in the price of related GOODS.
Increase in the cost of production
4.Increase in excise duty
SCHEDULE
Price of X
10
10
Supply of X in units
100
75
Or
Price of X in Rs.
10
12
Supply of X in units
100
100
STUDENT ORIENTATION
EVALUATION TOOLSConcept Test
1. . What is the meaning of supply?
2. Differenciate between stock and supply.
3. .Explain the law of supply with the help of schedule and diagram.
4.;What is individual supply?
HOME WORK
1.What are the main causes of upward sloping of supply curve?
2.What are the causes of increase in supply?
3.Distinguish between individual supply and market supply.
REMEDIAL MEASURESASSIGNMENT I
1. Explain the factors on which supply of a commodity depends?
2. 2.Explain the law of supply with the help of schedule and diagram.
3. What do you mean by change in quantity supplied?
ASSIGNMENT II
1. What are the causes of decrease in supply?
2-complete the following table
Price of X commodity
1
2
3
4
5
Supply by firm A
-
8
11
-
-
Supply by Firm B
2
-
-
9
10
Market Supply
6
13
18
3. What causes increase in supply?
ASSIGNMENT III
1. Distinguish between change in quantity supply and change in supply.
21
25
2. What are the causes of increase in supply?
3. Explain supply function in brief.
PROJECT
Survey a vegetable market and prepare a supply schedule for potato at various prices.
REFRENCES
1.WWW.sarswatihouse.com
2.Introductory Micro Economics by B.L.Gupta
3.www.vkpublications.com
4.Micro Economics by C.B. Sachdev
SUBJECT- ECONOMICS
CLASS-
XII
TOPIC-
ELASTICITY OF SUPPLY
TEACHER ORIENTATION
CONCEPT- Meaning of price elasticity of supply,Determinants of price elasticity of supply,
Types of price elasticity of supply
Measurement of price elasticity of supply
1. Percentage method
2. 2.Geometric method.
CONCEPT DETAILS
Meaning of Price elasticity of supply-Price elasticity of supply is defined as the responsiveness of quantity supplied of
a commodity to change in its own price.
____________________Es=Percentage change in quantity supplied/Percentage change in price
Or
Es=∆Q.P/∆P.Q
DETERMINANTS OF PRICE ELASTICITY OF SUPPLY
1.Time factor
2.Nature of the commodity
3.Production capacity
4Production methods and technology
5.Stage of law of returns
6. Future price expectations
7.Number of producers
DEGREES OF PRICE ELASTICITY OF SUPPLY
1.Perfectly inelastic supply(Es=0)-When supply of a commodity does not change irrespective of any change in its price
it is called perfectly inelastic supply.
Schedule
Price of x in Rs.
10
20
Supply in units
20
20
2. inelastic supply- When percentage change in quantity of supply Is less than percentage change in the price supply is
to be said inelastic or less than unitary elastic. Es=<1
SCHEDULE
Price of X in Rs.
10
20
Supply of X in units
20
24
3.Unitary elastic supply-Es=1 Supply of commodity is said to be unitary elastic if percentage change in supply equals
the percentage change in price.
SCHEDULE
Price of X in rs
10
20
Supply of X in units
20
40
4.Elastic supply(es>1) When percentage in supply is more than the percentage in price supply is said to be elastic or
more than unitary elastic.
SCHEDULE
Price of X in Rs.
10
11
Supply in units
20
40
5. Perfectly elastic supply(Es=∞) When supply of a commodity is said to be perfectly elastic when iuts supply
expands or contracts to any extent without any change in the price.
SCHEDULE
Price of X commodity in Rs. 10
10
Supply of X in units
10
20
10
30
MEASUREMENT OF ELASTICITY OF SUPPLY
1.Percentage method- Es=Percentage change in quantity supply /percentage change in price
Es= ∆Q.P/∆p.Q
Example The quantity- supplied of a commodity of a commodity at a price of Rs.4 per unit is 200 units ,if price falls 1
Rs then its becomes 300 units.calculate the Es?
Q=2oo, Q1=300, ∆Q=100, p=4,
∆p=1
Es=∆.Q.P/∆P.Q
Es=100.4/1.400
Es=1
2.GEOMETRIC METHOD- There are three situations under geometric method.
1. Any straight line supply curve passing through the origin has value of elasticity equal to 1.
2.If straight line supply curve goes through the quantity axis it is inlastic.
3. If a straight line supply curve goes through the price axis it is elastic.
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STUDENT ORIENTATION
EVALUATION TOOLS
Concept Test
1. What do you mean by price elasticity of supply?
2.What do you understand by inelastic of supply?
3. When is supply said to be inelastic?
4.When the price of a commodity rises from Rs 10 to 11 per unit its quantity supplied rises by 100 units. It price
elasticity is 2.Calculate its quantity supplied at the increased price.
HOME WORK
1.What does the elasticity of supply indicate?
2.When is elasticity of supply is said to be >1?
3. What are the causes which affect the price elasticity of supply?
REMEDIAL MEASURES
Assignment I
1 What does the elasticity of supply indicate?
2.Draw unitary elastic supply curve.
3.State the formula for the measurement of the elasticity of supply.
ASSIGNMENT II
1. When elasticity of supply said to be <1?
2. What is the price elasticity associated with a straight line supply curve passing through the origin?
3. When the price cheese rises from Rs,20 per kg to Rs. 21 per kg a producer expands his supply from 3000kg to 3500
kg. Calculate his price elasticity of supply?
ASSIGNMENT III
1.If two supply curves intersects each other , which one does have higher elasticity of supply?
2. What is the price elasticity associated with a straight line supply curve passing through the price axis?
3.Price elasticity of supply of a good is 5.A producer sales 500 units of goods at a price of Rs.5 per unit. How much will
he be willing to sale at the price of Rs.6 per unit.
PROJECT – 1. The co-efficienty of Es. Of a good is 8. A seller supplies 36 units of this good at a price of Rs.6 per unit .
How much quantity of this good will this seller supply When price rises by Rs. 10 per unit ?
3. Define price elasticity of supply . State the methods of measuring it?