The figure given below shows the demand [D and D'] and supply [S and S'] curves of shares of stock.Figure 17.2

-In the market for land as a resource, the demand curve is elastic while the supply curve is perfectly inelastic. Identify the underlying assumption.

Question

The figure given below shows the demand [D and D'] and supply [S and S'] curves of shares of stock.Figure 17.2
 
-In the market for land as a resource, the demand curve is elastic while the supply curve is perfectly inelastic. Identify the underlying assumption.

Quizplus · Accepted Answer

The assumption underlying the given market conditions is that the supply of land is fixed and cannot be increased or decreased in response to changes in demand. This is the reason why the supply curve is perfectly inelastic. On the other hand, the demand curve is elastic because there are many different ways in which land can be used as a resource, and consumers can switch to other resources if the price of land increases too much.

The Figure Given Below Shows the Demand [D and D']