At a price of Rs 40 per unit, the quantity supplied of a commodity is 400 units. When it's price falls by 10 percent, its quantity supplied falls by 30 units. Calculate it's elasticity of supply. Is it supply elastic Give reasons for your answer.

Dear Student,
  Price (₹) Quantity
Old 40 400
New 36 (90% of 40) 370 (400-30)

Elasticity of supply = change in quantitychange in price x Old PriceOld Quantity
                                = -30-4 x 40400
                               = 0.75
Hence elasticity is less than 1. It is inelastic.

Regards

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