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State geometric or point method of measuring ES (in case of straight line supply curve). |
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Answer» Solution :Case I : More than Unitary Elastic Supply ES `=("Intercept on X-axis with initial quantity")/("Quantity supplied at that price")=(QR)/(OQ)` Thus, we can get the value of elasticity of supply by dividing QR by OQ. Since, in the FIGURE , `QR GT OQ`, `ES=QR//OQ` will be greater than `1`.  Case II : Less than Unitary Elastic Supply `ES=("Intercept on X-axis with initial quantity")/("Quantity supplied at that price")=(QR)/(OQ)` extended MEETS X-axis to the right ofthe point of origin so that `QR lt OQ`. Therefore, the elasticity of supply `QR//OQ lt 1`  Case III : Unit Elastic Supply `ES=("Intercept on X-axis with initial quantity")/("Quantity supplied at that price")=(QR)/(OQ)` In the GIVEN diagram, supply CURVE when extended meets the X-axis exactly at the point of origin. So that `QR=OQ`. Therefore, there PES will be equal to 1 
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