If the demand for good A is more elastic than the demand for good B,a small increase in supply in both markets will cause
A)a much greater decrease in price for good A than for good B
B)a much greater decrease in price for good B than for good A
C)the price will decrease by the same amount in both markets
D)only the price of good B will decrease
E)only the price of good A will decrease

Question

Quizplus · Accepted Answer

When demand is more elastic, the quantity demanded will be more responsive to changes in price. Therefore, a small increase in supply will result in a greater decrease in price for the good with the more elastic demand, which is good B in this case.

If the Demand for Good a Is More Elastic Than