Below are two supply curves with differing elasticities. First, identify which s

Question

Below are two supply curves with differing elasticities. First, identify which supply curve is perfectly elastic and which is perfectly inelastic. Next, sort the characteristics of each curve into the correct bins 10 Supply Supply(1) Supply(1) A shift in demand will elicit Perfectly Elastic a large response in quantity supplied Quantity supplied does not respond to changes in price. A shift in demand will not elicit a change in quantity supplied. Quantity suppl 3Qusniny78 0 12 345 6 7 89 10 Quantity supplied is hypl sensitive Perfectly Inelastc to changes in price Previous ® Give Up & View Solution Check Answer Next Hint

Explanation / Answer

The curve supply 1 is perfectly elastic with es= infinity

Supply 1 curve is perfectly elastic. Quantity supplied is hyper sensitive to change in prices. A shift in demand will elicit large response in quantity supplied.

Supply curve is perfectly inelastic. Quantity supplied does not respond to change in prices. A shift in demand will not elicit large response in quantity supplied.

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