Economics Elasticity Of Supply Questions Medium
Unitary elastic supply refers to a situation in economics where the percentage change in the quantity supplied is equal to the percentage change in price. In other words, when the price of a product changes, the quantity supplied changes in the same proportion. This means that the elasticity of supply is exactly equal to 1.
In the case of unitary elastic supply, the supply curve is a straight line that passes through the origin on a graph. This indicates that suppliers are able to adjust their production levels in response to price changes, maintaining a constant ratio between the two variables.
Unitary elastic supply is considered to be an ideal scenario for both producers and consumers. For producers, it means that they can increase or decrease their supply without facing significant cost or production constraints. For consumers, it implies that price changes will not result in drastic fluctuations in the quantity available in the market.
Overall, unitary elastic supply reflects a balanced and responsive relationship between price and quantity supplied, allowing for efficient market adjustments.