An increase in demand for a good will lead to a larger increase in price if the supply is relatively elastic.

Question

Quizplus · Accepted Answer

If the supply is relatively elastic, it means that suppliers are able to increase production easily in response to an increase in demand without a significant increase in cost. Therefore, the larger increase in demand will be met with a proportionally larger increase in supply, leading to a smaller increase in price. On the other hand, if the supply is relatively inelastic, meaning that suppliers are unable to quickly increase production, the increase in demand will lead to a larger increase in price.

An Increase in Demand for a Good Will Lead to a Larger