question\nthe graph below represents the supply of good x. the numbers on the chart show the percent changes…

question\nthe graph below represents the supply of good x. the numbers on the chart show the percent changes in price and quantity moving along the supply curve. the numbers below the horizontal lines indicate the percent change in quantity, while the numbers to the right of the vertical lines indicate the percent change in price.\nwhich portion of the supply curve for good a is unitary elastic?

question\nthe graph below represents the supply of good x. the numbers on the chart show the percent changes in price and quantity moving along the supply curve. the numbers below the horizontal lines indicate the percent change in quantity, while the numbers to the right of the vertical lines indicate the percent change in price.\nwhich portion of the supply curve for good a is unitary elastic?

Answer

Explanation:

Step1: Recall elasticity formula

The price - elasticity of supply ($E_s$) is given by the formula $E_s=\frac{%\text{ change in quantity supplied}}{%\text{ change in price}}$. For unitary - elastic supply, $E_s = 1$.

Step2: Calculate elasticity at each segment

  • Between A and B: $%\text{ change in quantity}=30%$, $%\text{ change in price}=30%$, so $E_s=\frac{30%}{30%}=1$.
  • Between B and C: $%\text{ change in quantity}=37%$, $%\text{ change in price}=32%$, so $E_s=\frac{37%}{32%}\approx1.16$.
  • Between C and D: $%\text{ change in quantity}=25%$, $%\text{ change in price}=10%$, so $E_s=\frac{25%}{10%}=2.5$.
  • Between D and E: $%\text{ change in quantity}=15%$, $%\text{ change in price}=25%$, so $E_s=\frac{15%}{25%}=0.6$.

Answer:

The portion of the supply curve between A and B is unitary elastic.