Es DARWIN The Origin of Species E) perlecty inelastic. Price (dollars) Quantity

Question

Es DARWIN The Origin of Species E) perlecty inelastic. Price (dollars) Quantity (units per year) 32) The figure above shows the supply curve for a good with a A) perfectly elastc suppy B) perfecty ineastic supply C) elastic supply DI inelastic supply El unit elastic supply. 33) When the percentage change in the cuantty suppid euals thepercentage change in grice, the supply 's A) elastic B) inelastic C) unit elastc D) perfectly elasic. E) perfecty inelasic 34) When the percertage change in the quantty supplied is less than the percentsge change in price,tre supply is Al elastic B) inelashic. C) unt elassc. perfect, unteatic. El perfecty elastc

Explanation / Answer

(32) Since the supply curve is horizontal and it shows that with the % change in price % change in quantity supplied is unlimited and it tends to infinity.

It means supply is perfectly elastic.

Hence option A is correct.

(33)

When percentage change in price equal percentage change quantity supplied it is known as the unit elastic. This is because in this case elasticity of supply will be equal to 1.

Hence C is correct answer.

(34)

When percentage change quantity supplied is less than the percentage change in price, it is known as the

Inelastic supply. This is because in this case elasticity of supply will be less than 1.

Hence B is correct answer.

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