Under which method ,elasticity of supply depends on the origin of the supply curve?
Answer & explanation
Correct answer: option 2
The correct answer is Option 2: geometric method
In the geometric method, the elasticity of supply (Es) depends on the origin of the supply curve because:
1️⃣ Elasticity is measured using the intercept on the x-axis (quantity axis).
2️⃣ If the supply curve passes through the origin, the elasticity is always equal to 1 (unitary elastic supply).
3️⃣ If the supply curve cuts the x-axis, the supply is inelastic.
4️⃣ If the supply curve cuts the y-axis, the supply is elastic.
Thus, elasticity of supply depends on the origin in the geometric method, but not in the percentage method.