Similarly - Similarly if the elasticity of supply is...

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: Similarly, if the elasticity of supply is greater than or equal to 1, the curve will be elastic: relatively flat, with quantity supplied very responsive to changes in price. If the elasticity of the supply curve is less than 1, it will be inelastic: the curve will be flatter and quantity supplied will be less responsive to changes in price. Remember that elasticity is an absolute value; it doesn't indicate an increase in quantity with an increase in price when you are dealing with downward-sloping curves. Except for curves with an elasticity of 1, elasticity on straight-line curves is not constant. Why is this? As you move along the curve, the slope stays constant, so that each movement yields the same amount of increase or decrease. But as a curve shifts out, these increases or decreases make up a different percentage of the base amount, and...
View Full Document

{[ snackBarMessage ]}

Ask a homework question - tutors are online