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Question
Identify the elasticity of supply for the following with proper reasoning:
Nature of the entrepreneurs.
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Solution
Entrepreneurs who take risks and innovate are more likely to adapt swiftly to price fluctuations, resulting in more elastic supply. Companies may invest in new methods or technology to expand production quickly in reaction to price fluctuations. Entrepreneurs who avoid risk and prefer old methods are less likely to adapt production in reaction to price changes, resulting in inelastic supply.
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| B. Perfectly Elastic | (ii) Es < 1 |
| C. Inelastic | (iii) Es = 0 |
| D. Highly Elastic | (iv) Es = infinity |
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