For a product with a rapidly increasing opportunity cost of producing additional units,
A) demand is price elastic.
B) supply is price elastic.
C) demand is price inelastic.
D) supply is price inelastic.
E) the demand curve is vertical.

Question

Quizplus · Accepted Answer

A rapidly increasing opportunity cost of producing additional units indicates that the supply curve is becoming steeper and less elastic. This means that the price must increase in order to incentivize firms to produce more. Therefore, supply is price inelastic.

For a Product with a Rapidly Increasing Opportunity Cost of Producing