If the supply of a product is elastic, a small reduction in price will
ECONOMICS
JAMB 2013
If the supply of a product is elastic, a small reduction in price will
- A. reduce the cost of production
- B. reduce the quantity supplied
- C. increase the quantity supplied
- D. lead to no change in the quantity supplied
Correct Answer: B. reduce the quantity supplied
Explanation
Elastic demand means a change in price would cause a change in the quantity demanded. In an elastic demand, a small reduction in price would increase the quantity demanded and a decrease in the quantity supplied. This is so because, suppliers will not be willing to supply much goods when the price for it is low.
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