Question

suppose that the ingredients required to bring a slice of pizza to market and their respective costs are as listed in the table:

ingredients	cost
flour	8 cents
tomato sauce	20 cents
cheese	30 cents
labor (3 minutes @ $12/hour)	60 cents

if these proportions remain the same no matter how many slices are made, and the inputs can be purchased in any quantities at the stated prices, then the supply of slices is (click to select) , and the price elasticity of supply is (click to select) .

Explanation:

Step1: Define perfect - elastic supply concept

In a situation where the cost of producing each additional unit (a slice of pizza here) remains the same regardless of the quantity produced, the supply is perfectly elastic. The price elasticity of supply ($E_s$) for a perfectly - elastic supply is infinite.

Step2: Analyze cost structure

Since the proportions of ingredients and their costs remain the same no matter how many slices are made, the marginal cost of producing an additional slice is constant. This is a characteristic of a perfectly - elastic supply situation.

Answer:

The supply of slices is perfectly elastic, and the price elasticity of supply is infinite.