Question

Why is the supply curve with constant unitary elasticity a straight line?

Short answer

The supply curve with constant unitary elasticity is a straight line because there is a proportional increase in price and quantity.

Step-by-step solution

Step 1. Introduction:

A condition in which a price shift of one percent leads in a quantity change of one percent is known as constant unitary elasticity in either a supply or demand curve. A straight line represents the supply curve with unitary elasticity, and that line passes through the origin. There is an equivalent differential in quantity among each pair of supply curve nodes.

Step 2. Explanation:

The % output rises on the horizontal axis exactly match the percentage rising prices on the vertical axis along the constant unitary elasticity supply curve, indicating that this supply curve has constant unitary elasticity at all places. Because the curve slopes higher and both prices and outputs rise correspondingly, the constant unitary elasticity is a straight line.