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Observe the following figure : In the above figure, the elasticity of supply at A on the linear supply…

By the geometric formula for point elasticity of supply on a straight-line supply curve whose extension meets the horizontal quantity axis at \(B\), the price at point \(A\)…

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Observe the following figure :

Figure

In the above figure, the elasticity of supply at A on the linear supply curve is

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Answer and explanation

Correct answer A

By the geometric formula for point elasticity of supply on a straight-line supply curve whose extension meets the horizontal quantity axis at BB, the price at point AA is AQAQ, the quantity is OQOQ, and the reciprocal slope dQdP\frac{dQ}{dP} is BQAQ\frac{BQ}{AQ}. Therefore, es=dQdP⋅PQ=BQAQ⋅AQOQ=BQOQe_s = \frac{dQ}{dP} \cdot \frac{P}{Q} = \frac{BQ}{AQ} \cdot \frac{AQ}{OQ} = \frac{BQ}{OQ}, matching "BQ / OQ".

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  • Rajasthan SET (RSET)

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