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A short-run supply schedule for fighter aircraft shows 28 units offered at every price from $124 million to $175 million. The corresponding supply curve is:
Aa horizontal line, showing perfectly elastic supply
Ban upward-sloping line of unit elasticity
Ca downward-sloping line like a demand curve
Da vertical line, showing perfectly inelastic supply
Answer & Solution
Correct answer: D. a vertical line, showing perfectly inelastic supply
1. Read the schedule: quantity is fixed at 28 units across all listed prices.
2. With quantity unchanged as price changes, the percentage change in quantity is zero.
3. $E_s = 0$, which is perfectly inelastic supply.
4. A perfectly inelastic supply curve is vertical. A horizontal line would be perfectly elastic, the opposite case.
_Source: ICAI BoS CA Foundation Paper 4 Business Economics, Ch 2 Unit III "Supply", p.6_
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