Draw a perfectly elastic supply curve. Draw a perfectly inelastic supply curve.

Question

Draw a perfectly elastic supply curve.

Draw a perfectly inelastic supply curve.

Draw a supply curve, S1. Then draw a more elastic supply curve, S2.

If price were increased from $40 to $42 and quantity demanded fell from 50 to 45, calculate elasticity; state whether demand is elastic, unit elastic, or inelastic; and find how much total revenue was when price was $40 and $42.

If price were lowered from $50 to $43 and quantity demanded rose from 15 to 16, calculate elasticity; state whether demand is elastic, unit elastic, or inelastic; and find how much total revenue was when price was $50 and $43.

Explanation / Answer

1. Perfectly elastic is a horizontal line 2. Perfectly inelastic is a vertical line 3. The flatter the curve the more elastic it is. So draw a fairly steep one, and then a flatter one. 4. Using the midpoint formula (50-45)/(50+45) / (40-42)/(40+42)= -2.16 elastic. Original revenue 40*50= 2,000. New revenue 45*42= 1,890 5.(16-15)/(15+16)/ (43-50)/(43+50)= -0.43 inelastic Original revenue 50*15= 750 New revenue 43*16= 688

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