Statement I: A straight-line supply curve that cuts the quantity axis at a positive quantity has a price elasticity of supply less than 1 at every point on it.
Statement II: Two straight-line supply curves that pass through the origin but have different slopes have different price elasticities of supply.
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → Statement I is true but Statement II is false.
Statement I: A straight-line supply curve that cuts the quantity axis at a positive quantity has a price elasticity of supply less than 1 at every point on it. — True. By the geometric method, eS = Mq0/Oq0. When M lies on the positive side, Mq0 is less than Oq0, so eS < 1 at every point.
Statement II: Two straight-line supply curves that pass through the origin but have different slopes have different price elasticities of supply. — False. For a line through the origin, M is at the origin, so Mq0 = Oq0. Elasticity is 1 at every point, whatever the slope.
Note: Both statements here come from the box on the geometric method, printed after the main text. Read such boxes with their figures, line by line.
NCERT (2026-27): “The Geometric Method … In panel (c) we consider a straight line supply curve and S is a point on it. It cuts the quantity-axis at M which is at its positive range. Again the price elasticity of this supply curve at the point S is given by the ratio, Mq0/Oq0. Now, Mq0 < Oq0 and hence, eS < 1. S can be any point on the supply curve, and therefore at all points on such a supply curve eS < 1.” “The Geometric Method … Now we come to panel (b). Here the supply curve goes through the origin. One can imagine that the point M has coincided with the origin here, i.e., Mq0 has become equal to Oq0. The price elasticity of this supply curve at the point S is given by the ratio, Oq0/Oq0 which is equal to 1. At any point on a straight line, supply curve going through the origin price elasticity will be one.”
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