12. Elastic and inelastic supply The following graph shows the supply of a good

Question

12. Elastic and inelastic supply The following graph shows the supply of a good 60-+ Supply QUANTITY (Units) For each of the regions, use the midpoint method to identify whether the supply of this good is elastic or inelastic. Elastic Inelastic Region Between Y and Z Between w and x | True or False: For high levels of quantity supplied where firms have reached near maximum capacity, supply becomes less elastic because firms may need to invest in additional capital in order to further increase production. True False

Explanation / Answer

Between Y and Z : Inelastic
Between W and X: Elastic

For high levels of quantity supplied where firms have reached near maximum capacity, supply becomes less elastic because firms may need to invest in additional capital in order to further increase production.

True

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