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Question
Identify the elasticity of supply (es) of S1, S2 and S3 supply curves:
Options
All have es > 1
All have es < 1
All have es = 1
All have es = 0
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Solution
All have es > 1
Explanation:
In graphical presentation, when supply curves begin on the Y axis, the elasticity of supply is greater than 1. A curve beginning on the y axis indicates that even at a price close to zero, suppliers are prepared to deliver a certain number of goods. As the price rises, the quantity supplied grows at a faster rate, indicating high elasticity.
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