The price of a commodity is ₹10 per unit and its quantity supplied is 500 units. If its price falls by 10 per cent and quanity supplied falls to 400 units, Calculate its price elasticity of supply.

Explanation

Percentage change in Price `= (DeltaP)/(Q) xx 100 =(100)/(500)xx100= 20%`
`E_(s) = ("Percentage Change in Supply")/("Percentage Change in Price")= (25%)/(25%)` = 1
`E_(s) = 1` (Supply is unitary elastic as `E_(s) gt 1`)
`E_(s)` is always positive due to direct relationship between price and quantity supplied.