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 cure is relevant.

Question

Quizplus · Accepted Answer

A steeper supply curve indicates that a small change in price leads to a large change in quantity supplied, which means that the supply is elastic. In contrast, a flat supply curve indicates that a large change in price leads to a small change in quantity supplied, which means that the supply is inelastic. Therefore, the steeper supply curve represents a supply that is inelastic relative to the supply represented by the flatter supply curve. Option A is incorrect because the flat supply curve represents an inelastic supply, not the steeper supply curve. Option C is incorrect because the price elasticity of supply varies with different points along the supply curve. Option D is unrelated to the given information about the supply curves.

Suppose That Two Supply Curves Pass Through the Same Point