CA Foundation Exam > CA Foundation Questions > If supply curve is Perfectly Inelastic, the s...
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If supply curve is Perfectly Inelastic, the supply curve is:
- a)Vertical
- b)Horizontal
- c)Upward sloping
- d)Downward sloping
Correct answer is option 'A'. Can you explain this answer?
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Most Upvoted Answer
If supply curve is Perfectly Inelastic, the supply curve is:a)Vertical...
The correct answer is (A): Vertical
Explanation:
Perfectly Inelastic Supply Curve:
- A perfectly inelastic supply curve is a supply curve where the quantity supplied does not change, regardless of any change in the market price.
- In this case, producers are not responsive to changes in price, meaning they will supply the same quantity of a good or service no matter what the price is.
- This can be a result of factors such as limited resources, production constraints, or a lack of viable substitutes.
Vertical Supply Curve:
- A perfectly inelastic supply curve is represented by a vertical line on a graph with the Y-axis representing price and the X-axis representing quantity.
- The reason it is vertical is because the quantity supplied remains constant, regardless of the price. This means that the line will not slope upwards or downwards, but remain straight up and down along the Y-axis
In summary, a perfectly inelastic supply curve is represented by a vertical line because the quantity supplied does not change in response to changes in price.
Explanation:
Perfectly Inelastic Supply Curve:
- A perfectly inelastic supply curve is a supply curve where the quantity supplied does not change, regardless of any change in the market price.
- In this case, producers are not responsive to changes in price, meaning they will supply the same quantity of a good or service no matter what the price is.
- This can be a result of factors such as limited resources, production constraints, or a lack of viable substitutes.
Vertical Supply Curve:
- A perfectly inelastic supply curve is represented by a vertical line on a graph with the Y-axis representing price and the X-axis representing quantity.
- The reason it is vertical is because the quantity supplied remains constant, regardless of the price. This means that the line will not slope upwards or downwards, but remain straight up and down along the Y-axis
In summary, a perfectly inelastic supply curve is represented by a vertical line because the quantity supplied does not change in response to changes in price.
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If supply curve is Perfectly Inelastic, the supply curve is:a)Vertical...
Perfectly Inelastic Supply Curve
A perfectly inelastic supply curve is a situation where the quantity supplied remains constant irrespective of the change in price. In other words, the supply curve is vertical, and there is no change in the quantity supplied as the price changes.
Explanation
The supply curve is a graphical representation of the relationship between the price of a product and the quantity supplied by producers. In a perfectly inelastic supply curve, the quantity supplied remains the same regardless of the changes in price. This means that the price elasticity of supply is zero.
The reason why the supply curve is vertical is that producers are unable to adjust the quantity supplied based on the changes in price. They are unable to produce more goods or services even when the price rises or reduce the supply when the price falls. This is because the factors of production used in the production process are limited.
For instance, if the price of oil increases, the quantity supplied by oil producers remains the same. This is because they have a limited supply of oil, and they cannot produce more oil even when the price increases. Similarly, if the price of wheat decreases, the quantity supplied by wheat farmers remains the same because they have a limited amount of land to cultivate.
Conclusion
In conclusion, a perfectly inelastic supply curve is a situation where the quantity supplied remains constant irrespective of the change in price. The supply curve is vertical because producers are unable to adjust the quantity supplied based on the changes in price due to the limited factors of production.
A perfectly inelastic supply curve is a situation where the quantity supplied remains constant irrespective of the change in price. In other words, the supply curve is vertical, and there is no change in the quantity supplied as the price changes.
Explanation
The supply curve is a graphical representation of the relationship between the price of a product and the quantity supplied by producers. In a perfectly inelastic supply curve, the quantity supplied remains the same regardless of the changes in price. This means that the price elasticity of supply is zero.
The reason why the supply curve is vertical is that producers are unable to adjust the quantity supplied based on the changes in price. They are unable to produce more goods or services even when the price rises or reduce the supply when the price falls. This is because the factors of production used in the production process are limited.
For instance, if the price of oil increases, the quantity supplied by oil producers remains the same. This is because they have a limited supply of oil, and they cannot produce more oil even when the price increases. Similarly, if the price of wheat decreases, the quantity supplied by wheat farmers remains the same because they have a limited amount of land to cultivate.
Conclusion
In conclusion, a perfectly inelastic supply curve is a situation where the quantity supplied remains constant irrespective of the change in price. The supply curve is vertical because producers are unable to adjust the quantity supplied based on the changes in price due to the limited factors of production.
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If supply curve is Perfectly Inelastic, the supply curve is:a)Verticalb)Horizontalc)Upward slopingd)Downward slopingCorrect answer is option 'A'. Can you explain this answer?
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