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Chapter 5: Q.4 (page 129)

Why is the supply curve with constant unitary elasticity a straight line?

Short Answer

Expert verified

Because the curve is inclined upwards, and both price and quantity are rising in lockstep

Step by step solution

01

Definition

A supply curve graphically illustrates the relationship between price of product and quantity supplied. It indicates quantity supplied of products and at different price levels.

02

Explanation

Unitary elasticity is the link between a percentage change in price and an equivalent percentage change in quantity sought or delivered. Because the curve slopes higher and both price and quantity climb in lockstep, the constant unitary elasticity is a straight line.

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Most popular questions from this chapter

The supply of paintings by Leonardo Da Vinci, who painted the Mona Lisa and The Last Supper and died in 1519, is highly inelastic. Sketch a supply and demand diagram, paying attention to the appropriate elasticities, to illustrate that demand for these paintings will determine the price.

If demand is elastic, will shifts in supply have a larger effect on equilibrium quantity or on price?

What is the formula for calculating elasticity?

What is the formula for the elasticity of savings with respect to interest rates?

The equation for a supply curve is P = 3Q – 8. What is the elasticity in moving from a price of 4 to a price of 7?
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