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Chapter 5: Q.17 (page 130)

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

Short Answer

Expert verified

Demand will have a greater equilibrium.

Step by step solution

01

Definition

Demand curve:

The demand curve may be a graph that depicts the connection between the value of a commodity or service and also the quantity demanded overtime.

02

Explanation

In the situation of elastic demand, a change in quantity is more sensitive to a change in price than a change in price is to a change in quantity. When demand is elastic, a movement in the supply curve has a greater impact on quantity.

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Most popular questions from this chapter

In a market where the supply curve is perfectly inelastic, how does an excise tax affect the price paid by consumers and the quantity bought and sold?

Under which circumstances does the tax burden fall entirely on consumers?

What is the price elasticity of supply? Can you explain it in your own words?

What is the formula for calculating 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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