Vertical Supply Curve and Elasticity of Supply

A vertical supply curve is a graphical representation of a situation where the quantity supplied of a good or service remains constant regardless of changes in price. In other words, the supply is perfectly inelastic. This implies that the elasticity of supply is zero.

Elasticity of Supply

Elasticity of supply is a measure of the responsiveness of the quantity supplied to changes in price. It indicates how much the quantity supplied changes in response to a change in price. The formula for elasticity of supply is:

Elasticity of Supply = Percentage Change in Quantity Supplied / Percentage Change in Price

Vertical Supply Curve and Zero Elasticity of Supply

When the supply curve is vertical, it means that the quantity supplied is fixed at a specific level, regardless of changes in price. This means that the percentage change in quantity supplied is zero, as there is no change in quantity supplied.

Since the numerator (percentage change in quantity supplied) is zero, the elasticity of supply will be zero regardless of the percentage change in price. This indicates that the supply is perfectly inelastic.

Implications of Zero Elasticity of Supply

When the supply curve is perfectly inelastic, it means that producers are unable or unwilling to adjust the quantity supplied in response to changes in price. This could be due to various reasons, such as limited production capacity or fixed factors of production.

In the short run, when supply is inelastic, any increase in demand will lead to a significant increase in price, as producers are unable to increase the quantity supplied. This can result in a shortage of the good or service.

In the long run, if the supply curve remains vertical, it indicates that there are barriers to entry or restrictions on production that prevent new firms from entering the market and increasing supply. This can lead to higher prices and reduced consumer welfare.

Conclusion

In summary, a vertical supply curve parallel to the Y-axis indicates that the elasticity of supply is zero. This means that the quantity supplied remains constant regardless of changes in price. Understanding the elasticity of supply is important in analyzing supply and demand dynamics and their impact on market outcomes.

Yes its elasticity is zero as the quantity supplied cannot be rised