The Price elasticity of supply of a commodityt is 2.5. At a price of ₹5 per unit, its quantity supplied is 300 units. Calculate its quantity supplied at a price of ₹5 per units, its quantity supplied is 300units . Calculate its quantity supplied at a price of ₹4 per unit.

Explanation

Price Ealsticity of Supply `(E_(s)) = (DeltaQ)/(DeltaP) xx (P)/(Q)`
`2.5 = (DeltaQ)/(1)xx(5)/(300) i.e., Delta = 150`
As price decreases, the quantity suppplied will also decreases. It means
New Quantilty = Oringinal Quantity (Q) - Change in Quantity
= 300-150=150 units
New Quantity = 150 units