Question

Statement (1): When % change in quantity supplied to is equal to % change in price, then supply is unit elastic.

Statement (2): When a linear straight line passes through the origin, the elasticity of supply will be perfectly elastic.

विकल्प

• Both the statements are true.

• Both the statements are false.

• Statement 1 is true and Statement 2 is false.

• Statement 2 is true and Statement 1 is false.

Answer 1

Statement 1 is true and Statement 2 is false.

Explanation:

• Statement (1) is entirely true since unitary elastic supply (E_s = 1) is defined as a situation in which any percentage change in market price results in an exactly equal percentage change in quantity supplied.
• Statement (2) is false since, according to the geometric technique, every linear straight-line supply curve that goes exactly through the origin has an elasticity equal to unity (E_s = 1) regardless of the angle it creates. A perfectly elastic supply curve is denoted by a horizontal line parallel to the quantity axis.