For a given decrease in supply, the condition of demand that will result in the most significant change in price is when demand is
A)elastic.
B)inelastic.
C)perfectly elastic.
D)perfectly inelastic.

Question

Quizplus · Accepted Answer

If demand is elastic, a decrease in supply will result in a relatively large decrease in quantity demanded, causing a bigger decrease in price. This is because consumers are more sensitive to changes in price and have more alternatives to switch to when the supply decreases. In contrast, if demand is inelastic, a decrease in supply will result in a relatively small decrease in quantity demanded, leading to a smaller change in price. This is because consumers are less sensitive to changes in price and have fewer alternatives to switch to when the supply decreases. Therefore, the condition of elastic demand will result in the most significant change in price for a given decrease in supply.

For a Given Decrease in Supply, the Condition of Demand