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Question
When the percentage change in the quantity supplied of a commodity is exactly equal to the percentage change in its price it is known as ______.
Options
Unitary elastic supply
Relatively inelastic supply
Relatively elastic supply
Perfectly inelastic supply
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Solution
When the percentage change in the quantity supplied of a commodity is exactly equal to the percentage change in its price it is known as Unitary elastic supply.
Explanation:
Unitary elastic supply occurs when the percentage change in the quantity supplied of a commodity is exactly equal to the percentage change in its price. This means the elasticity of supply (Es) equals 1, indicating a proportional relationship between price and quantity supplied.
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