If supply is elastic, which statement is true? A) Supply reacts strongly to changes in price. B) Supply is unaffected by changes in price. C) It is easier to predict changes in demand. D) Producers respond slowly to changes in demand.
History · Middle School · Thu Feb 04 2021
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A) Supply reacts strongly to changes in price.
When supply is described as elastic, this means that suppliers are highly responsive to changes in the price of a good or service. In other words, if the price of a good increases, suppliers will increase the quantity supplied by a larger proportion, and if the price decreases, they will decrease the quantity supplied significantly. This responsiveness can be due to the nature of production for the good or service, existing inventories, the ease of entering or exiting the market, or the ability to switch resources to produce different goods or services.