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When change in the quantity supplied is proportionate to the change in the price, the producer is said to have ______:
  • a)
    Perfectly elastic supply 
  • b)
    Relatively elastic supply 
  • c)
    Unitary elastic supply 
  • d)
    Perfectly inelastic supply 
Correct answer is option 'C'. Can you explain this answer?
Most Upvoted Answer
When change in the quantity supplied is proportionate to the change in...
The correct answer is (C) Unitary elastic supply.
Explanation:
Unitary Elastic Supply:
- Unitary elastic supply occurs when the percentage change in quantity supplied is equal to the percentage change in price.
- In this case, the price elasticity of supply (PES) is equal to 1.
- PES is calculated as the percentage change in quantity supplied divided by the percentage change in price.
- Unitary elastic supply reflects a situation where producers are able to adjust their production levels proportionately to the changes in price.
- This type of supply response is more likely to be observed in markets where producers have some flexibility in adjusting their production levels but are not able to do so instantaneously or without constraints.
 
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When change in the quantity supplied is proportionate to the change in...
Unitary Elastic Supply

When the change in the quantity supplied is exactly proportionate to the change in the price, it is called unitary elastic supply. In other words, the percentage change in the quantity supplied is equal to the percentage change in the price. For example, if the price of a product increases by 10%, and the quantity supplied also increases by 10%, then the supply is unitary elastic.

Characteristics of Unitary Elastic Supply

- The elasticity coefficient is equal to 1, which means that the percentage change in the quantity supplied is equal to the percentage change in the price.
- The producer can adjust the supply quickly to changes in price, as the response is proportional.
- The producer earns constant revenue per unit, as the change in the quantity supplied is equal to the change in the price.

Examples of Unitary Elastic Supply

- Agricultural products like wheat, rice, etc., have unitary elastic supply, as the farmers can quickly adjust the production to changes in price.
- Commodities like electricity, petrol, etc., have unitary elastic supply, as the production can be easily adjusted to meet the demand.

Conclusion

Unitary elastic supply is an important concept in economics, as it helps producers to understand how changes in price affect the quantity supplied. It also helps in determining the optimal level of production to maximize revenue.
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When change in the quantity supplied is proportionate to the change in the price, the producer is said to have ______:a)Perfectly elastic supplyb)Relatively elastic supplyc)Unitary elastic supplyd)Perfectly inelastic supplyCorrect answer is option 'C'. Can you explain this answer?
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