CA Foundation P4 · Chapter 2 · Question 15 of 15
A straight-line supply curve that passes through the origin has a price elasticity of supply:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) Equal to one at every point, irrespective of its slope
Explanation
For a linear supply curve Q = bP passing through the origin, Es = (dQ/dP)(P/Q) = b x P/(bP) = 1. This holds at every point regardless of slope. A linear supply curve cutting the price axis has Es > 1, and one cutting the quantity axis has Es < 1.
More Theory of Demand and Supply MCQs
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- Q3For a normal good, an increase in consumers' income will cause:
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