Question

Suppose that two supply curves pass through the same point. One is steep, and the other is flat. Which of the following statements is correct? Question 5 options: A decrease in demand will increase total revenue if the steeper supply curve is relevant, while a decrease in demand will decrease total revenue if the flatter supply cure is relevant. Given two prices with which to calculate the price elasticity of supply, that elasticity would be the same for both curves. The flatter supply curve represents a supply that is inelastic relative to the supply represented by the steeper supply curve. The steeper supply curve represents a supply that is inelastic relative to the supply represented by the flatter supply curve.

Answer 1

Answer:  The steeper supply curve represents a supply that is inelastic relative to the supply represented by the flatter supply curve.

Explanation:

An inelastic curve means that price change does not affect the quantity supplied as much as it would an elastic curve.

The steeper the supply curve, the more inelastic it is because it reacts to changes in prices less than a flatter one which is considered to be more elastic.

Looking at a steep supply curve, if prices change, the quantity supplied will change less compared to a flatter one which would change more. This is why the steeper supply curve represents a supply that is inelastic relative to the supply represented by the flatter supply curve.