Which would result in a decrease in the elasticity of demand for a particular resource?
A)a decrease in the rate at which the marginal product of that resource declines
B)an increase in the elasticity of demand for the product that the resource helps to produce
C)a decrease in the percentage of the firm's total costs accounted for by the resource
D)an increase in the substitutability of other resources for the particular resource

Question

Quizplus · Accepted Answer

A decrease in the percentage of the firm's total costs accounted for by the resource would result in a decrease in the elasticity of demand for that resource. This is because if the resource represents a smaller portion of the total costs, changes in its price would have a less significant impact on the firm's overall costs, making the firm less sensitive (or elastic) to price changes of that resource.

Which Would Result in a Decrease in the Elasticity of Demand