Supply is inelastic or elastic

Reference no: EM13695154

In which case would the shortage resulting from a price ceiling be greater: when supply is inelastic or elastic? Explain your answer.

a. Inelastic. The reason is that the response in quantity supplied is greater when producers are not greatly affected by changes in price.

b. Elastic. The reason is that the response in quantity supplied is greater when price elasticity is greater.

c. Inelastic. The reason is that the response in quantity supplied is greater when price elasticity is lower.

d. Elastic. The reason is that the response in quantity supplied is greater when producers are not greatly affected by changes in price.

Reference no: EM13695154

Questions Cloud

What are the key issues : What are the key issues

Core process from the operations function : Select a core process from the operations function where you are currently employed and critically examine the challenges facing its operations manager(s) in terms of balancing the efficiency and effectiveness of this process.

Compute the amounts cash collected from clients : Compute the amounts Cash collected from clients during the year and cash paid for advertising expense

Would higher or lower rates increase the incomes of agents : Insurance agents receive a commission on the policies they sell. Many states regulate the rates that can be charged for insurance. Would higher or lower rates increase the incomes of agents? Explain, distinguishing between the short-run and the long-..

Supply is inelastic or elastic : In which case would the shortage resulting from a price ceiling be greater: when supply is inelastic or elastic?

What is the present discounted value : What is the present discounted value of $10,000 that is to be received in 4 years if the annual market rate of interest is

What are possible negative effects due to this price ceiling : Use supply and demand analysis to show the effect of a (binding) price ceiling in the market for rental properties. What are the possible negative effects due to this price ceiling? What happens to the total surplus (total surplus = consumers’ surplu..

Perfectly competitive firm exhibits resource efficiency : The perfectly competitive firm exhibits resource a locative efficiency (P = MC), but the single-price monopolist does not. What is the reason for this difference? Explain very briefly with good examples.

Assume the elasticity of demand for gasoline : Assume the elasticity of demand for gasoline is -0.3 and start with the current price of gasoline of about $3.00 per gallon. How much would we need to increase the price in order to cut gasoline use in half?

User Account

All Pages