3. Elastic and inelastic supply

The following graph plots a supply curve for some hypothetical good.

PRICE (Dollars per unit)QUANTITY (Units)Supply0V37.55W5012.5X22540Y45045

For each of the regions, use the midpoint method to identify whether the supply of this good is elastic or inelastic.

Region	Elastic	Inelastic
Between V and W
Between X and Y

True or False: As firms reach near maximum capacity at high levels of quantity supplied, supply becomes more elastic because firms may need to invest in additional capital in order to further increase production.

True

False