More potential sellers ______ the elasticity of ______ firm-level demand.
A) increase; short-run
B) decrease; short-run
C) increase; long-run
D) decrease; long-run

Question

Quizplus · Accepted Answer

When there are more potential sellers, there is greater competition in the market, leading to an increase in elasticity of demand in the short run. This is because in the short run, firms may not be able to adjust their production levels or prices as quickly as new firms enter the market, making their demand relatively more responsive to changes in price. In the long run, firms can adjust their production levels and prices more easily, reducing the impact of new competitors on the elasticity of demand.

More Potential Sellers ______ the Elasticity of ______ Firm-Level Demand

More Potential Sellers the Elasticity of Firm-Level Demand