The more elastic the supply of a resource,_____
A)the greater the economic rent as a proportion of total earnings.
B)the greater the opportunity cost as a proportion of total earnings.
C)the fewer the alternative uses the resource has.
D)the greater the derived demand for the resource.
E)the lower the derived demand for the resource.

Question

Quizplus · Accepted Answer

When the supply of a resource is more elastic, it means that it can be easily substituted by other resources, implying that the opportunity cost of using that resource increases as a proportion of total earnings. This is because the producer can easily switch to a substitute resource if the price of the current resource becomes too high. Therefore, the answer is B.

The More Elastic the Supply of a Resource,_____