If two supply curves pass through the same point and one is steep and the other
ID: 1091089 • Letter: I
Question
If two supply curves pass through the same point and one is steep and the other is flat, which of the following statements is correct?
The flatter supply curve represents a supply that is inelastic relative to the supply represented by the steeper supply curve.
The steeper supply curve represents a supply that is inelastic relative to the supply represented by the flatter supply curve.
Given two prices with which to calculate the price elasticity of supply, that elasticity is the same for both curves.
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.
The flatter supply curve represents a supply that is inelastic relative to the supply represented by the steeper supply curve.
The steeper supply curve represents a supply that is inelastic relative to the supply represented by the flatter supply curve.
Given two prices with which to calculate the price elasticity of supply, that elasticity is the same for both curves.
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.
Explanation / Answer
The flatter supply curve represents a supply that is inelastic relative to the supply represented by the steeper supply curve.