Question

Draw and briefly explain a perfectly elastic supply curve.

With the help of suitable diagrams, explain the Perfectly elastic supply.

Draw and explain the following degree of elasticity of supply.

E_p = 0

Answer 1

When the supply of a commodity changes without change in its price, the supply of a commodity changes without change in its price, the supply of the commodity will be called perfectly elastic. The value of price elasticity of supply in this case is infinity, e_s = α. It is purely an imaginary concept and can only be explained with the help of an imaginary supply schedule as given below.