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Question
When a straight-line supply curve passes through the origin, the elasticity of supply will be ______.
Options
Unitary elastic
Relatively elastic
Relatively inelastic
Perfectly elastic
Solution
When a straight-line supply curve passes through the origin, the elasticity of supply will be unitary elastic.
Explanation:
When a straight-line supply curve passes through the origin, the elasticity of supply is unitary elastic. This means that the percentage change in quantity supplied is exactly equal to the percentage change in price across the entire length of the supply curve. In this case, the elasticity of supply (Es) is equal to 1.
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