The input demand curve of an industry is relatively inelastic when:
A)the demand for the final product is relatively elastic.
B)the marginal rate of technical substitution is lower.
C)the supply curves of other inputs is relatively inelastic.
D)price of the input is higher than the price of other inputs.

Question

Quizplus · Accepted Answer

When the supply curves of other inputs are relatively inelastic, it means that there are limited substitutes for that input. In this situation, firms cannot easily switch to other inputs in response to changes in the price of the input in question. As a result, the quantity demanded of the input will not change much in response to changes in its price, making the demand curve relatively inelastic.

The Input Demand Curve of an Industry Is Relatively Inelastic