When the marginal cost is low, a factory running below capacity will not find it overly expensive to operate a few more hours per day. In this case, supply is more:
A) price elastic.
B) income elastic.
C) price inelastic.
D) income inelastic.

Question

Quizplus · Accepted Answer

When marginal cost is low, a factory can increase production without a significant increase in cost, making the supply more responsive to price changes, hence more price elastic.

When the Marginal Cost Is Low, a Factory Running Below