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When the per unit cost of producing a commodity is constant, the price elasticity of supply is?

A- zero
B- infinte
C- one
D- negative

User JBxOnline
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1 Answer

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Final answer:

With constant per unit production costs, the price elasticity of supply is infinite, reflecting perfect elasticity where producers supply an unlimited quantity at a set price.

Step-by-step explanation:

When the per unit cost of producing a commodity is constant, the price elasticity of supply is often considered to be infinite or perfectly elastic. This scenario describes an extreme case where the quantity supplied changes by an infinite amount in response to any change in price. Since a constant unit cost means that producers can supply any quantity at the same cost, the supply curve is horizontal, indicating perfect elasticity.

In summary, in the case of constant per unit costs of production, the supply response to a price change is extremely high. It's often characterized in economics as perfectly elastic supply, and corresponds to the descriptive theoretical case where producers will provide any amount of the good at a particular price level.

User Richard Reddy
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