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JAMB Economics 2007 Question 12

Question 12

Elasticity

A firm operating at full capacity will have a

  1. A.perfectly inelastic supply curve
  2. B.perfectly elastic supply curve
  3. C.fairly elastic supply curve
  4. D.fairly inelastic supply curve
Show the answer and explanation

Answer: A (perfectly inelastic supply curve)

Explanation

At full capacity the firm cannot produce more even if price rises, so its supply curve is vertical (perfectly inelastic).