Question

(iv) In the case of rare coins, supply curve will be
(A) horizontal
(B) vertical.
c ) backward bending
d) positively sloped​

Answer 1

In the case of rare coins, the supply curve will be vertical

• The supply curve will be vertical or parallel to the Y axis in the case of rare coins.  
• Because these items are uncommon, the supply of rare coins is completely inelastic, their supply can not change despite the price increase.
• For example, if the rare coin supply is one hundred, it remains the same regardless of whether the their cost is 4000 per coin or 40,000 per coin.

Answer 2

The supply curve of the rare coins will be vertical to the Y axis. Hence, the correct answer would be option (B) from the answer options given.

Explanation:

• Rare coins can be considered as valuable antiques,which are rarely available and its supply does not evidently depend on their market price or value.
• The law of supply is also not applicable for rare coins and similar antique products as even the market price or value of these items increases, the sellers cannot increase or commensurately adjust the supply level as these items are already rare and their supply is therefore,limited or fixed.
• Hence, the supply or availability of rare coins or antiques items does not depend on its market price because the rarity of these items prevents any consequent adjustment to their supply level.Therefore, the supply of rare coins and rare items is perfectly inelastic implying that the supply of these items or commodities is not at all influenced by their market price or value.
• Hence, the supply curve of rare coins will be vertical to the Y-axis reflecting the perfectly inelastic supply of these commodities or items.