Which would result in a decrease in the elasticity of demand for a particular resource?
A) a decrease in the rate at which the marginal product of that resource declines
B) an increase in the elasticity of demand for the product that the resource helps to produce
C) a decrease in the percentage of the firm's total costs accounted for by the resource
D) an increase in the substitutability of other resources for the particular resource

Question

Quizplus · Accepted Answer

When the percentage of the firm's total costs accounted for by the resource decreases, the resource becomes less important in terms of overall costs, reducing the impact of changes in the resource's price on the firm's production decisions. This causes the demand for the resource to become less elastic. The other choices would have the opposite effect on the elasticity of demand for the resource.

Which Would Result in a Decrease in the Elasticity of Demand