Final answer:
If the price elasticity of supply is 1.0, it is interpreted as unitary elastic supply, where changes in price and changes in the quantity supplied are proportional.
Step-by-step explanation:
If the price elasticity of supply is 1.0, then this value can be interpreted as:
B. Unitary elastic supply
A price elasticity of supply of 1.0, also known as unitary elasticity, indicates a proportional relationship between changes in price and changes in quantity supplied. In this scenario, a 1% change in price leads to an equivalent 1% change in the quantity supplied.
Unitary elasticity denotes a balanced responsiveness of supply to changes in price. Suppliers can increase their output in tandem with price increases without a significant increase or decrease in the proportion of goods supplied concerning the change in price. It represents a moderate sensitivity of suppliers to alterations in market prices.
Unlike perfectly elastic supply (A), where any change in price results in an infinite change in quantity supplied, or perfectly inelastic supply (D), where quantity supplied remains constant regardless of price changes, unitary elasticity (B) signifies a balanced, proportional response to price variations in the market.