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JAMB Economics 1985 Question 12

Question 12

Elasticity

Study the figure below. At point H, the price elasticity of supply is

Diagram for this question
  1. A.perfectly inelastic
  2. B.inelastic
  3. C.unit elastic
  4. D.perfectly elastic
  5. E.elastic.
Show the answer and explanation

Answer: B (inelastic)

Explanation

For a supply curve, a tangent through the origin means unit elasticity, a tangent cutting the price axis means elastic supply and a tangent cutting the quantity axis means inelastic supply. The curve is steep at H and its tangent there meets the quantity axis, so supply at H is inelastic.