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Question
With the help of a suitable diagram, explain the following degree of elasticity of supply.
Es = ∞
Solution
When there is an infinite supply at a particular price, then the supply is said to be perfectly elastic. The supply curve is a horizontal straight line parallel to the x-axis, as shown in the diagram. Quantity supplied can be OM, OQ or ON at the same price as OP.
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If price elasticity of supply is greater than 1, then supply is said be elastic.
- Price elasticity of supply of a good is 0.8, its supply is said to be inelastic.
- If the quantity supplied of a commodity remain the same whatever its price supply is said to perfectly inelastic.
Assertion (A): In case of perfectly inelastic supply, supply curve is a vertical straight line supply curve.
Reason (R): Supply does not change with change in price in case of Es = 0.
Define elasticity of supply.
Draw the supply curve showing price elasticity of supply greater than one.
Draw and explain the following degree of elasticity of supply.
Ep > 1
What is meant by inelastic supply?
Draw a straight line supply curve of the following situation.
More than unitary elastic
