The price of a commodity is ₹12 per unit and its quantity supplied is 500 units. When its price rises to ₹15 per units, its quantity supplied rises to 650 units. Calculate is price elasticity of supply. Is supply elastic?

Explanation

Price Elasticity of Supply `(E_(s)) = (DeltaQ)/(DeltaP) xx (P)/(Q) = (150)/(3) xx (12)/(500)= 1.20`
`E_(s) = 1.20` (Supply is highly elastic as `E_(s) gt 1`
`E_(s) ` is alaways positive due to direct relationship bbetween price and quantity supplied