Advertisements
Advertisements
Questions
Draw and briefly explain a perfectly inelastic supply curve.
Give the meaning of perfectly inelastic supply.
Draw and explain the following degree of elasticity of supply.
Ep = ∞
Advertisements
Solution
If there is no change in quantity supplied with changes in the price of the product, then the supply of that commodity becomes perfectly inelastic (i.e., E5 = 0). The supply curve will be a vertical line. This refers to when only one quantity can be supplied at any given price. The shape of perfectly inelastic supply is shown below.
The figure clearly shows that quantity supplied is fixed at OQ, whatever the price (P, P1 or P2). At all points on such a straight line supply curve, price elasticity of supply will be zero. The supply of genuine antique furniture is perfectly inelastic. Its supply cannot be changed. Antique furniture sellers cannot increase or decrease the amount of postage furniture they produce. Likewise the supply of rare books, stamps, old coins etc. is of this type.
APPEARS IN
RELATED QUESTIONS
Explain briefly the impact of the cost of production on the elasticity of supply.
Draw a well-labelled diagram showing the price elasticity of supply of a commodity starting from the origin.
What is the formula for percentage method of calculating price elasticity of supply?
Explain any three factors affecting elasticity of supply.
Identify the value of elasticity of supply for the supply curve OS and S1S2.
Identify the elasticity of supply for the following with proper reasoning:
Short run and long run period.
Identify the elasticity of supply for the following with proper reasoning:
Perishable and durable goods.
When an entrepreneur introduces a new technique or a new product, it is called ______.
When the price increases by 50% and the supply increases only by 5% the price elasticity of supply of that commodity will be ______.
Pick the option which does not belong to the group.
Draw a straight line supply showing elasticity greater than one.
Draw and briefly explain a perfectly elastic supply curve.
Draw the supply curve showing price elasticity of supply equal to one.
Draw the supply curve showing price elasticity of supply less than one.
Indicate the degree of elasticity on the supply curve given below:
What is meant by inelastic supply?
Price elasticity of supply of a good is 0.8. Is the supply 'elastic' or 'inelastic', and why?
Explain the percentage method of measuring price elasticity of supply.
Define a relatively inelastic supply.
