Question

Identify and define the degree of price elasticity of supply from the diagram for the supply curves S₁, S₂, S_3, S₄.

Answer 1

The supply curves S₁, S₂, S₃, and S₄ exhibit various types of price elasticity of supply, which are as follows: The S₁ - OS₁ supply curve demonstrates Unitary Elastic Supply since the change in the amount supplied is proportional to the change in price. Symbolically, it is expressed as E_s = 1.

The S₂ - OS₂ supply curve demonstrates More Elastic Supply because a little change in price causes a significant change in quantity delivered. Symbolically, it is expressed as E_s > 1.

The S₃ - OS₃ supply curve demonstrates Perfectly Inelastic Supply, which means that a change in price causes no change in supply. Symbolically, it is expressed as E_s = 0.

The S₄ - OS₄ supply curve demonstrates Less Elastic Supply since a change in price results in a modest change in supply. Symbolically, it is expressed as E_s < 1.