Two extreme case supply

Two extreme case supply - curve (S 1 in the figure below)....

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Two extreme cases: two extreme values of price elasticity of supply can be included in the analysis: i) Perfectly Price Elastic: At this extreme for any small decrease in price, the quantity supplied is infinitely large. In such a case, suppliers supply all they can. Here the supply is said to be perfectly price elastic (e = that is infinity ). This is represented graphically by a horizontal supply
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Unformatted text preview: curve (S 1 in the figure below). ii) Perfectly Price Inelastic: At this extreme for any change in price there is no change in the quantity supplied. Therefore the supply is completely indifferent to any change in price (e = 0). Here the supply is said to be perfectly price inelastic. This is represented graphically by a vertical supply curve (S 2 in the figure below)....
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