Choice "B" is correct. Price elasticity of supply is calculated the same way as demand except that quantity supplied is measured:
Price elasticityof supply (%) | = | % change in quantity suppliedchange in price |
Perfectly inelastic supply curves are also vertical representing that supply is insensitive to changes in price; i.e., the quantity supplied will not change as price changes. Perfectly inelastic supply curves would exist if firms cannot vary input usage. Regardless of price, the firm has to use all inputs if it produces at all.Choices "a", "c", and "d" are incorrect.
