Since the demand curve for computer chips is elastic, a decrease in the price of computer chips caused by an increase in productivity will _____ revenue for the computer chip industry and make computer chips a _____ share of the American economy.
A) increase; larger
B) increase; smaller
C) decrease; larger
D) decrease; smaller

Question

Quizplus · Accepted Answer

Since the demand curve for computer chips is elastic, a decrease in the price of computer chips caused by an increase in productivity will lead to an increase in revenue for the computer chip industry, as more units will be sold due to the decrease in price. This increase in revenue can lead to computer chips being a larger share of the American economy.

Since the Demand Curve for Computer Chips Is Elastic, a Decrease