Question

Which of the following statements is correct? Select one: a. Supply curve A is perfectly elastic. b. Supply curve C is more inelastic than supply curve D. c. Supply curve B is perfectly inelastic. d. Supply curve D is unit elastic.

Answer 1

The following statement supply curve A is perfectly elastic and supply curve B is perfectly inelastic are correct.

Explanation:

If there is no response from demand to prices and supply curve is vertical then the supply is perfectly inelastic.If there is more change in demand and very less change in price and supply curve is horizontal then the supply is perfectly elastic.

If the elasticity is greater than one that indicates high change in price known as Elastic supply. if the Elasticity is less than one that indicates low change in price then it is said to be Inelastic supply.