question archive If the supply of a product is inelastic, a
If the supply of a product is inelastic, a
Subject:EconomicsPrice:2.88 Bought4
If the supply of a product is inelastic,
a. a 25 percent change in price will lead to more than a 25 percent change in quantity supplied.
b. a 25 percent change in price will lead to a 100 percent change in quantity supplied.
c. a 25 percent change in price will lead to less than 25 percent change in quantity supplied.
d. a 25 percent change in price will lead to a 25 percent change in income.
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Option c. a 25 percent change in price will lead to less than 25 percent change in quantity supplied is correct.
The supply of an item being inelastic implies that the manufacturer cannot alter the supply if the prime factor affecting supply level, that is, price, changes. It can happen in situation when the producer cannot arrange for fixed capital immediately.
