Question

On Friday slightly an hour before the market closes Moshe Yarkoni, the owner of a tomato...

On Friday slightly an hour before the market closes Moshe Yarkoni, the owner of a tomato stand

in the Carmel market had 20 kilos of tomatoes left. How would his supply curve of tomatoes

look at that time? What is the supply elasticity?

Homework Answers

Answer #1

The supply curve of the seller will become a vertical straight line before the market closes. This implies that supply elasticity will become zero. This is because at the time before the market closes, the seller can sell those 20 units left at any price he gets, no matter how low or high the price he gets. The reason is that tomatoes are a perishable commodity and will get spoint if they are not sold in the market. Thus, the seller will be ready to sell these at any possible price.

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