All else equal,a smaller elasticity of the supply curve to the other firms leads to a ________ individual firm's residual elasticity of demand.
A) less elastic
B) unit elastic
C) more elastic
D) zero

Question

Quizplus · Accepted Answer

When the elasticity of the supply curve of other firms is smaller, it means they are less responsive to changes in price. This implies that if an individual firm increases its price, the other firms in the market are unlikely to increase their supply significantly, leaving the individual firm with a relatively stable residual demand. Therefore, the individual firm's residual elasticity of demand becomes less elastic.

All Else Equal,a Smaller Elasticity of the Supply Curve to the Other