Question

State and explain the elasticity of supply when a straight line supply curve is parallel to the X-axis.

Answer 1

A situation known as infinite or fully elastic supply occurs when a very slight change in price results in an infinite response in the amount of an item provided.

It describes a scenario in which any quantity will be provided at the going rate, but nothing will be provided at a reduced cost. An indefinitely elastic supply curve, S₁, is depicted in Fig. as a horizontal straight line that travels parallel to the X-axis. At price OP, it exhibits infinite elasticity, indicating that sellers are willing to sell an infinite amount of a good at that price and that no supply would be made at a somewhat lower price. Here, the supply elasticity is infinite (∞). This is a severe instance of supply elasticity. Although it is rarely used in real-world situations, it is a highly helpful standard.