If firms' costs rise rapidly as output increases, the
A) supply curve will tend to be flat.
B) demand curve will tend to be steep.
C) price elasticity of supply will tend to be low.
D) price elasticity of supply will tend to be high.
E) elasticity of demand will tend to be low.

Question

Quizplus · Accepted Answer

If firms' costs rise rapidly as output increases, it means that it is difficult for firms to increase production in response to price changes. This suggests that the price elasticity of supply will tend to be low.

If Firms' Costs Rise Rapidly as Output Increases, the