The supply of agricultural labour in a village is given by $L_{s} = 0.6, W^{0.5}$ , where $L_{s}$ is in thousands and $W$ is the daily wage rate in rupees. If the wage rises from Rs. 80 to Rs. 100, calculate the price elasticity of supply over this interval.

hard 5 marks Class 12 · Economics · Rural Development

Answer

0.50

The correct answer is 0.50 — Compute elasticity: $(Δ L_{s} / L_{a v g}) / (Δ W / W_{a v g}) = (0.6334/5.6833) / (20/90) = 0.1115/0.2222 = 0.5025$ . Round to two decimal places: 0.50.

Step-by-step solution

Compute initial supply: $L_{80} = 0.6 80 = 0.6 \times 8.9443 = 5.3666$ thousand.
Compute final supply: $L_{100} = 0.6 100 = 0.6 \times 10 = 6$ thousand.
Find change in supply: Δ $L_{s} = 6 - 5.3666 = 0.6334$ thousand.
Find average supply: $(5.3666 + 6) /2 = 5.6833$ thousand.
Compute change in wage: Δ $W = 100 - 80 = 20$ rupees.
Find average wage: $(80 + 100) /2 = 90$ rupees.
Compute elasticity: $(Δ L_{s} / L_{a v g}) / (Δ W / W_{a v g}) = (0.6334/5.6833) / (20/90) = 0.1115/0.2222 = 0.5025$ . Round to two decimal places: 0.50.

Common mistake: Using absolute wage change instead of average wage in denominator

Concept tested: Price elasticity of labour supply

Published 10 October 2026 · How this solution was prepared and checked

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The supply of agricultural labour in a village is given by Ls​=0.6,W0.5, where Ls​ is in thousands and W is the daily wage rate in rupees. If the wage rises from Rs. 80 to Rs. 100, calculate the price elasticity of supply over this interval.

Step-by-step solution

The supply of agricultural labour in a village is given by $L_{s} = 0.6, W^{0.5}$ , where $L_{s}$ is in thousands and $W$ is the daily wage rate in rupees. If the wage rises from Rs. 80 to Rs. 100, calculate the price elasticity of supply over this interval.