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Chapter 5: Q.16 (page 130)

If demand is inelastic, will shifts in supply have a larger effect on equilibrium price or on quantity?

Short Answer

Expert verified

A shift in supply will have a greater impact on the price equilibrium.

Step by step solution

01

Definition

Inelastic supply :

Inelastic supply occurs when the change in quantity supplied is smaller than the change in price for a product. It suggests the supply curve is steeper and the slope is higher. It demonstrates that supply elasticity is less than one.

02

Explanation

Demand will have a greater impact on equilibrium, price, or quantity as elastic shifts. A movement in the supply curve will modify the equilibrium price more than the equilibrium quantity with a vertical, or inelastic, demand curve.

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Most popular questions from this chapter

From the data in Table 5.5 about the demand for smartphones, calculate the price elasticity of demand from point B to point C, point D to point E, and point G to point H. Classify the elasticity at each point as elastic, inelastic, or unit elastic.

If demand is elastic, will shifts in supply have a larger effect on equilibrium quantity or on price?

Why is the supply curve with constant unitary elasticity a straight line?

Describe the general appearance of a demand or a supply curve with zero elasticity.

What is the relationship between price elasticity and position on the demand curve? For example, as you move up the demand curve to higher prices and lower quantities, what happens to the measured elasticity? How would you explain that?
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