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Question
Identify the degree of elasticity of supply from the following graph:
Options
ES > 1
ES < 1
ES = 1
ES = 0
Solution
ES = 1
Explanation: The supply of a commodity is said to be unit elastic when the percentage change in supply is equal to percentage change in price. Thus, any straight line supply curve drawn through the origin has an elasticity of unity over its entire length, irrespective of its slope.
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