Suppose that two supply curves pass through the same point. One is steep, and the other is flat. Which of the following statements is correct?
A)The flatter supply curve represents a supply that is inelastic relative to the supply represented by the steeper supply curve.
B)The steeper supply curve represents a supply that is inelastic relative to the supply represented by the flatter supply curve.
C)Given two prices with which to calculate the price elasticity of supply, that elasticity would be the same for both curves.
D)A decrease in demand will increase total revenue if the steeper supply curve is relevant, while a decrease in demand will decrease total revenue if the flatter supply curve is relevant.

Question

Quizplus · Accepted Answer

The steeper supply curve represents a supply that is more inelastic compared to the flatter supply curve. This is because a steep curve indicates that a change in price leads to a relatively smaller change in quantity supplied, characteristic of inelastic supply. Conversely, a flatter curve suggests that a small change in price leads to a larger change in quantity supplied, indicating more elastic supply.

Suppose That Two Supply Curves Pass Through the Same Point