Write the condition and draw the diagram only for the elasticity of supply is greater than one and less than one by geometric method.
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Explanation:
We have been studying the impact of price on supply. However, all these definitions have been qualitative. With this in mind, the price elasticity of supply came into existence. The price elasticity of supply tackles the quantitative side of the price and supply relationship.
It refers to the degree of responsiveness of supply of a commodity with reference to change in the price of such commodity. Note that the price elasticity of supply is always positive. This happens because of the positive or direct relationship between price and supply, unlike demand.
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Explanation:
Unitary Elastic Demand Curve
Example: The price of digital cameras increases by 10%, the quantity of digital cameras demanded decreases by 10%. The price elasticity of demand is (unitary elastic demand).
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