If the estimated elasticity of supply coefficient equals 0.85, then:
A)the supply curve is vertical.
B)the demand curve is horizontal.
C)supply is unit elastic.
D)supply is relatively inelastic.

Question

If the estimated elasticity of supply coefficient equals 0.85, then:
A)​the supply curve is vertical.
B)​the demand curve is horizontal.
C)​supply is unit elastic.
D)​supply is relatively inelastic.

Quizplus · Accepted Answer

If the estimated elasticity of supply coefficient equals 0.85, it means that a 1% change in price will result in a relatively smaller percentage change in the quantity supplied (less than 1%). This indicates that supply is relatively inelastic, as producers are not very responsive to changes in price.

If the Estimated Elasticity of Supply Coefficient Equals 0