Question

Write True or False with a reason.
At a point of intersection of two supply curves, flatter curve shows higher elasticity of supply.

• A. True
• B. False

Answer 1

The correct option is A True

True: Flatter supply curve is more elastic than the relatively steeper one at the point of intersection.

From the diagram, the Supply curve SS and S1S1 intersect each other at point E.
At point E, the quantity supplies (OQ) is at the price OP.
When the price falls to OP1 from OP. Quantity supplied falls from OQ to OQ2 for the supply curve SS and from OQ to OQ1 for supply curve ​S1S1.
Clearly from the diagram, we can see that change in supply in case of supply curve SS is more than a change in supply curve ​S1S1.