Exhibit 5.10

-Refer to Exhibit 5.10,which shows two upward-sloping linear supply curves that pass through the origin.The price elasticity of supply between $10 and $20 on the supply curve S is _____
A)0.
B)infinity.
C)1.
D)2.
E)10.

Question

Exhibit 5.10
 
-Refer to Exhibit 5.10,which shows two upward-sloping linear supply curves that pass through the origin.The price elasticity of supply between $10 and $20 on the supply curve S is _____
A)0. 
B)infinity. 
C)1. 
D)2. 
E)10.

Quizplus · Accepted Answer

The price elasticity of supply (PES) between $10 and $20 on supply curve S can be calculated as the percentage change in quantity supplied divided by the percentage change in price. Since the supply curve is linear, the PES is constant along the curve. Between $10 and $20, the quantity supplied increases from 0 to 10, which is a 100% change. The price increases from $10 to $20, which is a 100% change. Therefore, the PES is 1.

Exhibit 5.10 -Refer to Exhibit 5.10,which Shows Two Upward-Sloping Linear Supply Curves