Question

State and explain the elasticity of supply when a straight-line supply curve cuts the X-axis.

Answer 1

When the percentage change in a commodity's quantity supplied is smaller than the percentage change in its price, the supply is said to be inelastic. In this instance, the amount delivered is comparatively less sensitive to price fluctuations. In this instance, supply elasticity is less than one. An inelastic supply curve S₃ is shown in Fig. Elasticity is below unity everywhere along this supply curve. Elasticity is always less than 1, but it varies along the supply curve. An inelastic supply is present across any straight-line supply curve that crosses the X-axis.