alleryA vertical supply curve drawn parallel to the price axis indicates that the elasticity of supply is:
Azero (perfectly inelastic)
Binfinite (perfectly elastic)
Cequal to one (unit elastic)
Dgreater than one but finite
Answer & Solution
Correct answer: A. zero (perfectly inelastic)
1. A vertical supply curve means quantity supplied is the same at every price.
2. With no change in quantity, the percentage change in quantity is zero.
3. $E_s = 0 \div (\% \text{ change in price}) = 0$.
4. Zero elasticity is perfectly inelastic supply.
_Source: ICAI BoS CA Foundation Paper 4 Business Economics, Ch 2 Unit III "Supply", p.6_
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