Supply curves with constant price elasticity

Steps:

• Observe the shapes of S1, S2, and S3 in the diagram, noting they are linear rays from the origin, horizontal, or vertical.
• Recall price elasticity of supply (PES) formula: PES = (%ΔQ)/(%ΔP) = (dQ/dP) × (P/Q).
• For rays from origin, Q = kP, so PES = 1 constant; horizontal lines give infinite PES; vertical lines give zero PES.
• Verify each curve maintains fixed PES at all points, unlike typical linear curves where it varies.

Why D is correct:

• Constant PES holds when curves are proportional (rays), horizontal, or vertical, as (dQ/dP) × (P/Q) remains unchanged along each.

Why the others are wrong:

• A: PES stays fixed, does not increase with rising price.
• B: Diagram shows S2 and S3 may have equal or varying PES, not necessarily S2 less elastic.
• C: S1 and S2 elasticities depend on curve type, not always S1 greater.

Final answer: D