A horizontal supply curve parallel to the quantity axis implies that t...
The correct answer is Option B: Infinite
Explanation:
Elasticity of supply- refers to the responsiveness of the quantity supplied of a good to a change in its price. It is calculated as the percentage change in quantity supplied divided by the percentage change in price.
A horizontal supply curve parallel to the quantity axis implies that the supply is perfectly elastic. In other words, suppliers are willing and able to supply any amount of the good at a constant price.
This situation leads to an infinite elasticity of supply because:
- The percentage change in price is zero (since the price remains constant).
- The percentage change in quantity supplied can be any positive value (as suppliers can produce any amount at the constant price).
- Elasticity of supply formula: % change in quantity supplied / % change in price
- When the denominator (% change in price) is zero, the elasticity of supply becomes infinite.
In summary, a horizontal supply curve parallel to the quantity axis implies that the elasticity of supply is infinite because suppliers can produce any amount of the good at a constant price, and the responsiveness of quantity supplied to a change in price is infinitely large.
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A horizontal supply curve parallel to the quantity axis implies that t...
Explanation:
When we plot the supply curve on a graph, the price is shown on the vertical axis and the quantity supplied is shown on the horizontal axis. The slope of the supply curve shows the responsiveness of the quantity supplied to changes in the price of the product. This responsiveness is known as the elasticity of supply.
When a supply curve is parallel to the quantity axis, it means that the quantity supplied remains constant regardless of changes in price. This is because the slope is zero. A zero slope means that the elasticity of supply is zero, which implies that the quantity supplied is perfectly inelastic.
However, the question asks about a supply curve that is parallel to the quantity axis but not touching it. This implies that the slope is undefined, which means that the elasticity of supply is infinite. An infinite elasticity of supply means that even a small change in price will cause an infinite change in the quantity supplied.
In other words, a horizontal supply curve that is parallel to the quantity axis represents a situation where the producer is willing to supply any quantity of the product at a given price. This is usually seen in situations where the cost of production is very low and the producer can easily increase supply without incurring additional costs.
Therefore, the correct answer to this question is option B, which states that the elasticity of supply is infinite when the supply curve is parallel to the quantity axis.
A horizontal supply curve parallel to the quantity axis implies that t...
The correct answer is 'B' whenever the supply cure is parallel to quantity axis the elasticity is always infinity and this type of situation occur in perfect competition because the seller connot increase the price.
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