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

When the percentage of a firm's total costs accounted for by a particular resource decreases, the resource becomes less important in the production process, and firms may be less sensitive to its price changes. Therefore, demand for that resource tends to become less elastic.

Which Would Result in a Decrease in the Elasticity of Demand