| Sumario: | This article discusses the behavior of price elasticity along linear demand functions. Prices and total revenues move together. About the most shown is that linear supply functions are unit elastic if they pass through the price-quantity origin when extended, elastic, if they intersect the price axis and inelastic, if they intersect the quantity axis. Several recent studies used linear functions to estimate production response and supply elasticity for important commodities in less developed nations. In each of these studies, policy implications might have been sharpened had price elasticity behavior along the estimated linear supply curves been considered in conjunction with the published elasticity estimates computed at mean values. The supply elasticity varies along any linear supply function, which does not intersect the origin. At higher prices and outputs, the linear function's elasticity approaches +1.0, the speed of approach depending upon the size of the price or quantity axis intercept. Sellers' total revenue always increases along any positively sloped supply curve as price rises.
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