When factor supply is fixed and quantity of the factor is graphed on the horizontal axis while factor price is graphed on the vertical axis, the factor:
A) supply curve is horizontal.
B) supply curve is vertical.
C) supply curve slopes up to the right.
D) demand curve slopes up to the right.

Question

Quizplus · Accepted Answer

When factor supply is fixed, the supply curve becomes vertical as the quantity of the factor supplied cannot be increased at different prices. This is because the amount of the factor available is fixed, regardless of the price. Therefore, as factor price increases, the quantity supplied does not change, and thus the supply curve becomes vertical.

When Factor Supply Is Fixed and Quantity of the Factor