Iron is required to make steel. Hence, the price elasticity of demand for iron by steel manufacturers will be

Question

Quizplus · Accepted Answer

Since iron is a necessary input for making steel, steel manufacturers are likely to have fewer substitutes for iron. As a result, the demand for iron by steel manufacturers is likely to be inelastic, meaning that a change in the price of iron will have a proportionally smaller effect on the quantity of iron demanded by steel manufacturers. Therefore, option B is the best choice.

Iron Is Required to Make Steel